The US dollar advanced against the euro and headed for the biggest weekly gain in three months, on speculation the worst of the financial crisis in the world’s largest economy is over. The US currency advanced after Wells Fargo, the second- largest US home lender, announced yesterday that first-quarter net income surged 50 percent because of “strong” revenue from Wachovia Corp., which it acquired last year. Movement for the greenback should remain limited ahead of the Easter holiday.
The euro fell to its lowest in almost a month against the US dollar, dented by holiday trade and speculation the European Central Bank may be edging closer to unconventional easing. The single currency also headed for its biggest weekly decline versus the yen since January on increased concerns the ECB will keep cutting interest rates to spur growth.
Sterling weakened versus the US dollar and yen as the National Institute of Economic and Social Research said yesterday the UK’s economy contracted 1.5 percent in the first three months of the year following a decline in the fourth quarter. The pound also lost ground against the greenback and yen as British stocks fell for the first time in five weeks and on concern the recession in the UK may be worsening.
The Japanese yen slightly weakened against the US dollar as the Japanese government announced it would sell more than $100 billion in debt in the next 12 months to finance a record economic stimulus plan. This move could put pressure on the Bank of Japan to buy more government bonds. Japan's economy is worsening rapidly with exports and production tumbling and job conditions are also deteriorating sharply.
The Canadian dollar steadied against the US dollar in thin holiday trading conditions as global equity markets surged Thursday on optimism about the US banking sector, whetting appetite for risk in the foreign exchange market.
Commodity-based currencies and cyclical currencies are now seeing a rebound.
The Australian dollar and New Zealand dollar steadied against the US dollar as investors continued their focus on signs that the economy may be stabilizing.
Australian and New Zealand financial markets will be closed on April 10 for the Good Friday holiday and on April 13 for Easter Monday.
