Daily currency report
Overview
Data on weekly US jobless claims, which fell close to four-year lows, sent stock markets soaring and safe haven currencies tumbling. Traders shunned the defensive US dollar and resumed carry trade activity. The New Zealand dollar rushed back towards September highs, boosted even more by bullish comments coming from the Reserve Bank of New Zealand’s chief, Alan Bollard, who said the economy may be bigger than expected. The safe haven yen was already on the slide following the Bank of Japan’s decision earlier in the week to ramp up downward pressures on its currency to maintain stability for Japanese exporters. Eurozone headlines also helped drive positive sentiment back into trading activity after the European Central Bank announced that it will begin work on swapping Greek bonds, suggesting Athens is on the verge of finally getting hold of its next loan of €130 billion. Sterling continued to consolidate its position against the majority of its main rivals after the Bank of England inflation report helped dampen quantitative easing worries.
Sterling
The pound rose to three-month peaks on the yen after Nationwide’s encouraging consumer confidence report complimented Wednesday’s Bank of England inflation report which was less dovish than analysts had predicted. Sterling also spiked against the US dollar after upbeat data on US unemployment claims and manufacturing activity lessened global growth concerns.
US dollar
Investors surprisingly sold the US dollar after another set of improved US fundamentals encouraged some risk taking. Unemployment claims unexpectedly fell close to four-year lows, implying the US jobs market has turned a corner and may help encourage more consumer spending. The dollar’s decline was limited however, capped by Europe’s ongoing struggle to agree a deal with Greece over its next emergency loan.
Euro
The euro rebounded higher on news the European Central Bank and other national governments are to begin work on swapping Greek government bonds to secure future returns, suggesting a deal to loan more cash to Athens is almost done. Optimism is growing that Greece has overcome final hurdles in terms of more budget cuts in order to meet terms of its next bailout after it appeared that eurozone leaders were considering withholding the next €130 billion emergency loan until after Greek elections in April.
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