The Greenback rises against the Euro as investor optimism stutters

The dollar gained against the euro as Asian stocks extended a global slump, spurring demand for the relative safety of the U.S. currency. The euro declined against the dollar on speculation European Central Bank officials will today signal they plan to take further unconventional measures to keep down borrowing costs. There is concern a U.S. jobs report today will show the global economy continues to deteriorate, damping the appetite for emerging-market assets. “Riskier investments are being unwound, as reflected by the declines in Asian equities,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo. “Against that backdrop, the yen is likely to strengthen beyond 95 per dollar while the greenback will probably be bought versus other major currencies.” The EUR/USD is currently trading at $1.3585 as of 8:53am, London time.

Sterling fell sharply against the dollar and the euro on Wednesday after a bleak set of Bank of England forecasts on inflation and growth suggested that interest rates will remain very low for some time. The Inflation Report forecast inflation will fall to 0.5 percent before rising to just above 1 percent in two years time, and the economy will shrink sharply in the coming months before recovering at a slower pace than previously thought. The BoE also gave no hint of an end to its quantitative easing programme, with Governor Mervyn King saying it will take six to nine months before they can assess the impact of quantitative easing on the economy. The GBP/USD is currently trading at $1.5150 as of 8:55am, London Time.

Japan's Nikkei average touched a two-week low on Thursday as exporters slid on a firmer yen and renewed concerns about the U.S. economy, while Nikon Corp tumbled after it forecast its first annual operating loss in 11 years. Sales at U.S. retailers fell for a second straight month in April, breaking a string of more upbeat reports that had suggested the economic slump was abating and helping to push the Dow Jones industrial average .DJI down 2.2 percent on Wednesday. Market watchers said the combination of a stronger yen and lower U.S. stocks has dented recent short-covering momentum, which helped propel the Nikkei to a six-month closing high on Monday, prompting some participants to offload positions in stock futures. The USD/JPY is currently trading at 95.50 as of 9:02am, London Time.

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