|09-05-2014, 02:15 PM||#1|
Dollar remains firm after ECB shock, focus shifts to NFP
The dollar remained near six-year high against yen, and near 14-month high against the euro after the European Central Bank delivered a rate cut and announced fresh round of stimulus and promised even more if needed.
The shared currency tumbled in the previous session, having suffered its steepest fall in three years after the ECB surprised markets by cutting interest rates and embarking on a trillion-euro asset-buying binge.
ECB policymakers on Thursday cut interest rates to 0.05 percent from 0.15 percent and the deposit rate to minus 0.2 percent from minus 0.1 percent, meaning lenders would have to pay more to keep their cash at the central bank.
The central bank also unveiled plans to purchase asset-backed securities to help kick-start lending in the region.
Euro rose slightly in Europe bouncing off its lowest levels since July 2013, pushing the EURUSD pair to trade at $1.29534. Against the yen, euro was up at ¥136.305.
The upbeat data for the world’s number one economy only reinforced the case for the Federal Reserve to wind down its stimulus, driving the dollar higher.
Data in the previous session showed U.S. private companies hired workers at a steady level in August and services sector activity accelerated to a 6-1/2-year high.
Dollar remained strong on Friday, trading at 83.75 after opening at 83.93. The USDIX index so far hit intraday high at 83.95 and low at 83.73.
Investors will be closely watching U.S. non-farm payrolls data due later in the day, for further clues about the world`s largest economy and the timing of the Federal Reserve`s move to raise interest rates.
Data today may show payrolls climbed by more than 200,000 in August for a seventh straight month.
Against the yen, dollar weakened slightly in Europe pushing the USDJPY pair to trade at ¥105.190 after starting at ¥105.256. The pair so far rose to intraday low of ¥105.090.
On Thursday, the Bank of Japan (BoJ) kept its loose monetary policy in place but held off expanding the program.
The central bank stood by its rosy view of the world’s number three economy despite mounting evidence that an April sales tax hike has stalled growth.
The weakening economy has stoked speculation that Japan’s central bank will be forced to act to counter the downturn, putting pressure on the yen.
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