Dollar Springs To Life Amid Panic Selling In Market
The dollar rallied on a turbulent day in the markets Thursday, as a global run from risk gave the reserve currency a modest boost.
Measured against a basket of major counterparts, the dollar jumped to its highest level since July 19, taking back steep recent losses.
Stocks were hammered and commodity prices tumbled amid mounting concerns about the health of the global economy. A discouraging jobless claims report from the U.S. was overshadowed by a trio of interest rate decisions.
Central bankers in the euro zone and Japan eased monetary policy this morning, acknowledging that the pace of the fragile recovery has stalled.
The European Central Bank kept its key interest rate on hold and added liquidity to the banking system.
Earlier, Japanese authorities intervened in the currency markets to weaken the surging yen.
The Bank of England retained its key interest rate at a record low and maintained the size of the quantitative easing at GBP 200 billion.
At the end of two-day rate setting meeting, the Monetary Policy Committee led by Governor Mervyn King decided to hold the interest rate at 0.50 percent.
The dollar rose to a two-week high of $1.4190 versus the euro, and improved to $1.6290 against the sterling.
After surging above Y80 after the Japanese intervention, the dollar quickly eased back below Y79. The buck hit a record low Y76.28 earlier in the week, prompting officials in Tokyo to take action.
The Swiss franc remained the world’s most attractive currency, staying at CHF 0.7680 versus the buck. The dollar hit an all-time low near CHF 0.76 on Tuesday.
On the other other hand, the dollar rallied to a monthly high versus its petro-linked Canadian counterpart. With oil dropping below $90 a barrel, the dollar was nearly two cents from par against the loonie.
First-time claims for U.S. unemployment benefits showed a modest decrease in the week ended July 30th, according to a report released by the Labor Department on Thursday, although the drop came from the previous week’s upwardly revised number.
The report showed that initial jobless claims edged down to 400,000 from the previous week’s revised figure of 401,000. Economists had been expecting jobless claims to rise to 403,000 from the 398,000 originally reported for the previous week.
