Forex: Thursday's review
The dollar strengthened from almost a three-year low even as claims for unemployment benefits jumped last week and worker productivity slowed in the first quarter, encouraging the Federal Reserve to keep borrowing costs low.
Applications for jobless benefits jumped by 43,000 to 474,000 in the week ended April 30, the most since August, Labor Department figures showed today. The measure of employee output per hour increased at a 1.6 percent annual rate after a 2.9 percent gain in the prior three months, other data from the Labor Department showed.
U.S. employers added 185,000 jobs in April after a 216,000 increase in March, the median estimate of economists survey forecast before data due tomorrow.
The euro dropped the most against the dollar in two weeks and slid versus the yen after European Central Bank President Jean-Claude Trichet signaled the ECB may wait until after June to raise interest rates again.
Japan’s currency climbed versus all of its 16 most-traded peers and reached the strongest level in six weeks against the dollar as falling commodities prompted investors to unwind bets in higher-yielding assets financed with yen. Currencies of commodity-exporting nations including Australia, Norway and Canada plunged.
The ECB left its main refinancing rate unchanged after boosting it a quarter-percentage point in April to 1.25 percent. Trichet, at a news conference in Helsinki, refrained from using the phrase “strong vigilance,” which might have signaled a June rate increase. He instead said inflation risks will be watched “very closely.”
While inflation accelerated to 2.8 percent last month and economic growth is gaining momentum, higher borrowing costs may exacerbate Europe’s debt crisis, which has already forced Greece, Ireland and Portugal to ask for external help.
EUR/USD: on results of yesterday's session the pair decreased in around $1,4540, lost more than 350 points.
GBP/USD: on results of yesterday's session the pair decreased below a mark $1,6400.
USD/JPY: the pair shown low in the field of Y79,50, then restored and finished the session in the field of Y80,30.
German industrial output data for March is also due, at 1000GMT.
UK data includes PPI Producer Prices at 0830GMT, followed by SMMTNew Car Registrations data at 0900GMT and also Q1 Insolvency Data at 0930GMT. PPI data for April is expected to see output prices at 0.7% m/m, 5.1% y/y with input prices up by 1.6% m/m, 16.3% y/y and core output prices up 0.4% m/m, 3.1% y/y.
The main event comes at 1230GMT, when non-farm payrolls are expected to rise 185,000 in April. Private payrolls are seen up 200,000. The unemployment rate is forecast to stay at 8.8% after four straight declines. Hourly earnings are expected to post a 0.2% rise following flat readings in February and March, while the average workweek is forecast to hold steady at 34.3 hours for another month.