The dollar's respite proved short-lived as traders resumed selling the currency in the Thursday session, pushing it to a fresh one-year low against the Australian dollar at 0.9088 and two-week low against the euro at 1.4816. The equity, commodity and energy markets were in lockstep as spot gold touch record high for its third consecutive session past the $1,055 per ounce level and crude oil edging back above the $70 per barrel level near $72. The major US equity bourses also climbed higher, with the S&P 500 and Nasdaq advancing by nearly 1% in the afternoon session.
The economic data released earlier in the session saw weekly jobless claims improve to 521k from 551k a week prior and the August wholesale inventories slip by 1.3% from a 1.4% decline in the previous month. Speaking earlier today was Richmond Fed President Lacker reiterated that the economic outlook remains unchanged from the previous FOMC meeting, adding that the risk of sliding into a recession again in 2010 has diminished substantially. He also quelled speculation of impending rate hikes advising that the Fed should not tighten policy today.
Euro Edges Past 1.48
The euro touched a two-week high at 1.4816 on the heels of the ECB monetary policy decision in morning trading. As expected the ECB left interest rates unchanged at 1.0%, but the focus largely hovered over the subsequent press conference from Bank President Trichet for a sense of whether the ECB follow the RBA in tightening monetary policy. Trichet said that current interest rates are appropriate and a return of inflation to moderate positive rates expected within coming months. He added that he expects to see a period of stabilization and gradual economic recovery. Moreover, Trichet suggested that the recent survey indicators support for the view the Eurozone economy is stabilizing. Although Trichet didn't provide clear signals that interest rate increases were imminent, it can be interpreted that rates have bottomed and the next move by the Bank will rate hikes instead.
EURUSD holds steady near 1.48, with support seen at 1.4760, followed by 1.4730 and 1.47. Subsequent floors are eyed at 1.4650, backed by 1.46 and 1.4570. On the upside, gains will target 1.4830, followed by 1.4860 and 1.49. Additional resistance will emerge at 1.4940, backed by 1.4980 and 1.50.