The greenback surged higher on Thursday as investors reacted to a decidedly upbeat interest rate announcement from the U.S. Federal Reserve made earlier on Wednesday. More significantly, Ben Bernanke and company said 'deterioration in the labour market is abating', which traders took as a validation to price-in a future Fed rate hike. The U.S. central bank is widely expected to look at the jobless rate as the key gauge for timing a reversal of its ultra-loose monetary stance.
The euro tumbled in Asian trading as stops were triggered and the single currency hit an intra-day low of 1.4304 , its lowest level since September 7, in New York before stabilizing.
U.K. retail sales came in at -0.3% m/m n 3.1% y/y in November respectively, much weaker than the expectation of 0.4% and 3.5% increase. The British pound tumbled from intra-day high of 1.6340 after the news, reached as low as 1.6080 before recovering in New York on profit-taking.
Although U.S. jobless claims rose unexpectedly to 480,000 (economists' consensus forecast was 465,000) from 473,000 for the previous week, dollar continued to display strength against the yen and rose to intra-day high of 90.38 in NY. However, better-than-expected leading indicators coming out of U.S. rekindled risk appetite and the pair retreated sharply in NY afternoon before stabilizing. U.S. leading indicators rose by 0.9% versus the expectation of 0.7% whilst the Philly Fed also came in higher-than-expected at 20.4 in November against previous month's reading of 16.7.
Data to be released on Friday include Japan BOJ rate decision, U.K. financial stability report, PSNCR, German PPI, eurozone current account and trade balance, Canada wholesales sales data on Friday.