Dollar, Yen Gain On Bleaker Economic Recovery Outlook

The Dollar and Yen gained against the EUR and other higher yielding currencies Thursday on concerns about the sluggish pace of the world economic recovery. A Decline in equity and commodity prices pushed investors back into the USD and JPY as safe haven currencies.

Economic News

USD - USD Gains on Weak U.S Economic Data

The Dollar gained versus the EUR and other higher yielding currencies on Thursday following the release of weak U.S. economic data and a steep drop in global equities. The Dollar index rose to 75.3108 from 75.108 late Wednesday. The Dollar was supported versus other currencies as U.S. stocks fell, following weakness in European and Asian equities. The Dollar tends to have an inverse relationship to moves by equities and commodities throughout the global financial crisis.


The U.S. Labor Department said 505,000 Americans filed initial claims for unemployment benefits in the latest week, unchanged from the previous week and a level considered still too high to indicate payrolls numbers will turn positive in the near term. U.S. leading indicators rose 0.3% in October after a 1% gain in September; signaling the U.S economy might be recovering at a decelerating rate.


Currency movements have been largely confined to recent ranges as the market continues to debate the speed of economic recovery and the direction of U.S. monetary policy.

EUR - EUR Struggling to Rise above $1.50 Level

The EUR and other higher yielding currencies declined Thursday as weakening confidence about the global economic recovery prompted investors to turn to the Dollar and Yen for safety. Disappointing U.S economic data as well as steep drop in equities triggered a decline in demand for risk. Signals from world leaders regarding a more restrictive official stance toward capital flows and currency volatility also contributed to investors' risk aversion. The EUR was at $1.4910 from $1.4960 late Wednesday and at Y132.54 from Y133.73. The Pound was at $1.6651 from $1.6740.


The EUR is struggling to rise above $1.50 and is mainly caught between $1.48 and $1.50 trading levels. Further caution arises from ambivalent signals coming from Federal Reserve speakers about the possible timing of interest-rate hikes as well as the Fed's attitude toward the weakening Dollar.

JPY - JPY Trades Near a Two Week High versus Euro

The JPY traded near a two week high versus the EUR after the biggest drop in global equities this month prompted investors to turn to the safety of the Japanese and U.S. currencies. The Yen traded at 132.80 per EUR early this morning, after climbing yesterday to 131.76, the strongest level since Nov. 3. Japan's currency was at 88.98 against the USD, following a 0.4% gain.