The dollar hit a one-month low against the sterling pound on Wednesday and the EUR broke above $1.50 for the first time in 14 months as expectations that U.S. interest rates will be kept low continued to weigh on the greenback.
Though the U.S. economy is expected to have exited the recession in the third quarter, investors fear rising unemployment will keep the Fed from lifting interest rates quickly. That would diminish the dollar's appeal and encourage investors to buy higher-yielding, higher-risk currencies and assets instead.
Analysts have suggested that central banks outside of the United States are considering winding down programs that have flooded their economies with money. If the U.S. Federal Reserve doesn't follow suit and holds interest rates at record lows, that would diminish investor desire to hold dollars.
Today's Unemployment Claims release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the Dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost Treasuries and actually aid the U.S Dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the Dollar. Or it could also encourage risk-taking and aid commodities and higher-yielding currencies at the Dollar's expense.