The Japanese yen climbed significantly as weak U.S. economic data

The US dollar is mixed this morning following worse then expected data releases coupled with a return to risk aversion. Jobless Claims increased 3,000 to 588K for the week ending January 24, reaching their highest level on record.
Additionally, data showed orders for U.S. durable goods fell by more than expected in December, down 2.6%, adding to worries about a deepening U.S. recession. The USD continued to climb after data showed sales of new U.S. homes plunged by 14.7% last month, underscoring the depth of the U.S. recession and heightened fears for global growth.
Economic concerns overshadowed news that the U.S. House of Representatives approved President Barack Obama $825 billion economic stimulus package, though it did so without any Republican votes. The bill now faces a vote in the Senate which is expected to meet the mid-February deadline.
Analysts still warn that the global economic outlook remains bleak and that the slightly more positive sentiment seen this week could quickly turn.

Euro zone data on Thursday showed German unemployment posted its biggest increase in nearly four years this month while euro-zone economic sentiment dipped to the lowest level since record-keeping began in 1985.
Weak euro zone figures were likely to cap any significant gains in the euro against the dollar, analysts said.
Adding additional pressure to the euro were comments from European Central Bank President Jean-Claude Trichet, who told CNN that the ECB could cut euro-zone rates below the current 2% and adopt unconventional measures to boost the economy. Markets will await next Thursday’s BoE and ECB interest rate meetings for additional direction.

The British pound reached its highest level against the euro in over a week on large month-end flows, which outweighed gloomy news on the UK economy.
The small interest rate differential between the UK and the euro zone diminishes the attractiveness of the euro against the pound.
The IMF predicted on Wednesday that Britain's economy would contract 2.8% this year, which would be the deepest recession among the world's most-developed nations.
Nationwide building society also announced that UK house prices posted a record annual fall of 16.6% in January.

The Japanese yen climbed significantly as weak U.S. economic data and falling share prices kept investors wary of risk even as countries embraced further monetary and fiscal stimulus to boost struggling economies.

The Canadian dollar is losing yesterday’s gains on the back of today’s return to extreme risk aversion following the release of negative economic news out of the US. Unfortunately, climbing oil prices are failing to benefit the faltering loonie.

The Australian dollar rose to a six-month high against the New Zealand dollar today following the 150 basis point rate cut by the Reserve Bank of New Zealand, taking its official rate below Australia's for the first time in five years. The kiwi fell to its lowest level in 6 years against the USD on the news.
That move, along with lower commodity prices, dragged the Aussie lower against the U.S. dollar.
Markets are pricing in a 100 basis point cut by the RBA although weak data from a host of Asian powerhouses, including some of Australia's biggest trading partners, has kept alive speculation of a much bigger reduction.