The greenback and Japanese yen declined broadly on Thursday as investors were encouraged to buy more risky assets after leaders of the G20 nations agreed to pump an additional $1 trillion dollars into the ailing global economy through extra funding for groups like the IMF and on a change in U.S. accounting standards that should help troubled banks. In late New York afternoon session, the ICE futures U.S. dollar index shed 1.13 percent to 84.457, after dropping to as low as 84.051.
The single currency surged to a session high of $1.3518 and 134.23 yen versus the dollar and Japanese yen respectively, boosted by less-than-expected ECB’s rates cut decision (0.25 percent versus the forecast of 0.50 percent to 1.25 percent), however, comments by ECB President Jean-Claude Trichet refused to rule out additional rate cuts in future limited the pair’s upside and the euro last traded up 1.6 percent to $1.3460 and 2.6 percent to 133.98 yen. Meanwhile, the single currency also extended its gain against the Swiss franc after SNB reiterated its pledge to intervene in currency markets to prevent the franc from appreciating, eur/chf rose to as high as 1.5285 and ended up 0.6 percent to 1.5270 in late U.S. session.
The British pound jumped to as high as $1.4750 and 141.96 yen as U.K. Nationwide Building Society said house prices in Britain unexpectedly rose for the first time since October 2007 in March because of the interest-rate cuts by BOE that attracted buyers to the property market. The sterling was last trading up 1.7 percent to $1.4723 and 2.8 percent to 146.66 yen at New York afternoon session.
The improvement in investors' risk appetite also sparked a rally in commodity currencies like the Australian dollar, New Zealand dollar and the Canadian dollar, they were up 2.6 percent to $0.7155, 2.1 percent to $0.5780 and 1.7 percent to 1.2593 against the dollar respectively.
U.S. stock markets rallied on Thursday and by the end of New York trading, the Dow Jones Industrial average closed up 2.79 percent, or 216 points to 7,978, while Standard & Poor’s 500 index and Nasdaq Composite index also jumped 2.87 percent and 3.29 percent to 834 and 1,602 respectively.
Data from U.S. showed that jobless claims last week rose to the highest level in 26 years, swelled by 12,000 to 669,000 in the week ended March 28, the most since 1982, while report from Commerce Department stated that orders to factories improved in February for the first time in seven months, posted a 1.8 percent gain versus minus 1.9 percent in previous month.
On Friday, economic data releases include German import price index and PMI service, Switzerland’s CPI data, eurozone PMI service, U.S. non-farm payrolls, average earnings, unemployment rate and ISM non-manufacturing. At 16:30GMT, Fed’s chairman Ben S. Bernanke will give the closing keynote address at the Richmond Fed’s bank’s third annual Credit Markets Symposium.