The greenback weakened against a basket of six other major currencies on Thursday as rising stocks in Europe and U.S. boosted demand for higher risk assets. In late New York trading, the ICE future dollar index slid 0.28 percent at 82.334, however, dollar gained against the safe-haven Japanese yen due to a modest increase in risk appetite and usd/jpy edged higher from session low of 95.10, last trading at around 95.75/85.
Earlier in the day, European currencies such as euro and sterling dropped versus the U.S. dollar and yen as sharp decline in Asian equity markets increased risk concerns. The single currency fell to as low as 1.3525 and 128.87 against the greenback and yen respectively, while the British pound dropped to sessions low of 1.5059 versus the dollar and 143.45 against the yen. However, rebound in U.S. stock markets pushed the safe-haven U.S. and Japanese currencies lower in New York session, and currencies pairs such as eur/usd, eur/jpy, gbp/usd and gbp/jpy surged to as high as 1.3667, 130.93, 1.5249 and 146.13 respectively before stabilising.
Commodity currencies such as the New Zealand dollar and Australian dollar benefited from U.S. data that showed producer prices rose 0.3 percent in April, which added signs that the worst of the recession is over may boost commodity costs further. The New Zealand and Australian dollars reversed early losses against the greenback and rose from 0.5861 to 0.5988 and 0.7466 to 0.7618 respectively.
Economic data from U.S. showed that more Americans than economists’ forecast filed first-time claims for unemployment insurance last week (reflecting a jump in applications related to the Chrysler LLC bankruptcy), initial jobless claims rose by 32,000 to 637,000 in the week ended May 9, from a revised 605,000 the prior week, while the total number of people collecting unemployment insurance surged in the prior week to 6.56 million (a record for the 15th straight week). A separate report stated that prices paid to U.S. producers rose 0.3 percent in April, more than consensus forecast of a rise of 0.2 and followed a drop of 1.2 percent in March.
Economic data releases on Friday include Japan Domestic CGPI and machine tool orders, German GDP, Switzerland’s retail sales, eurozone’s GDP and HICP, and U.S. CPI, empire state manufacturing, real earnings, foreign treasury buys, net LT TIC flows, capacity utilization and University of Michigan survey.