Major Currency Pairs: Euro Rose Against The Dollar

EUR/USD
The euro rose against the dollar on Thursday after the European Central Bank concluded a policy meeting leaving rates unchanged and added it would not introduce fresh stimulus measures. Strong U.S. economic indicators failed to give the dollar support against the single currency in early afternoon trading. The ECB announced earlier it was its holding benchmark interest rate at 0.25%, as expected. European Central Bank President Mario Draghi said monetary policy will remain accommodative for as long as necessary and added that interest rates are likely to remain at current or lower levels for an extended period of time. Still, Draghi gave no indication over whether or not the ECB will introduce negative interest rates, which sent the euro rising over the greenback despite better-than-expected growth and jobs data out of the U.S.

GBP/USD
Surprisingly strong U.S. gross domestic product and weekly jobless claims reports sent the dollar firming against the pound on Thursday, a day before the release of the eagerly awaited monthly U.S. jobs report. The U.S. data kept hopes going for Federal Reserve to begin tapering its dollar-weakening monetary stimulus programs in early 2014. Stimulus tools such as the Fed's USD85 billion in monthly bond purchases aim to drive recovery by pushing down long-term interest rates, weakening the dollar as long as they remain in effect. The U.S. economy increased by a seasonally adjusted annual rate of 3.6% in the three months to September, well above expectations for 3.0% growth and up from a preliminary estimate of 2.8%, according to Commerce Department data released earlier. Meanwhile in the U.K., the Bank of England's monetary policy committee voted to leave rates on hold at 0.5% and made no changes to its GBP375 billion quantitative easing stimulus package.

USD/JPY
Is approaching levels in the 101 handle that might offer further support depending on tomorrows data outcomes. Established in September from 101.50 and 100.80.Meanwhile, ADP employment survey’s came in stronger from the US that has heightened investor expectations that the Fed may begin to taper QE earlier at the 17th-18th December or 28th-29th January FOMC meetings. Lee Hardman at The Bank of Tokyo-Mitsubishi UFJ said “The survey highlights that the labour market has remained surprisingly resilient to the government shutdown and debt ceiling uncertainty. The release of the Fed’s Beige Book overnight also revealed that “hiring showed a modest increase or was unchanged across the country””.

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USD/CAD
The Canadian dollar appreciated for the first time in five days, rising from a more than three-year low, amid speculation employment growth may suggest stronger economic improvement than the Bank of Canada indicated. The currency gained against most major peers as Canadian building permits increased more than forecast in October. A report tomorrow is predicted to show the economy added jobs for a fourth month in November. Canada’s currency fell yesterday to C$1.07 per U.S. dollar as the central bank warned of low inflation, spurring bets it will keep interest rates on hold as the Federal Reserve lets U.S. borrowing costs rise by trimming bond-buying. Futures of crude oil, Canada’s biggest export, rose for a fifth day, gaining 0.1 to $97.31 per barrel in New York after touching $97.99, the highest level since Oct. 29.

Written By: ICM Brokers