The Dollar falls as investors see signs of global economic recovery

The Greenback fell against the currencies of six major U.S. trading partners as signs of global economic recovery spurred demand for riskier assets. The euro strengthened versus the dollar after European Central Bank President Jean Claude Trichet said the region’s economy is emerging from a period of “free fall.” Trichet signaled the ECB will keep interest rates at a record low to spur growth as the euro’s 6 percent rally this year against the dollar threatens to undermine the recovery from Europe’s worst recession since World War II. “You’re definitely seeing the rate differentials move in their favor even more,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “There’s risk seeking, and there’s data that’s supporting them.” The EUR/USD is currently trading at $1.4780 as of 21:10PM, London Time.

The British pound rose against a broadly weaker dollar on Thursday and held its gains after the Bank of England kept interest rates unchanged as widely expected and made no changes to its asset purchase plan. The BoE left its official interest rate at a record low of 0.5 percent for the seventh month running and said it would keep in place its 175 billion pound programme to buy assets from the market to increase liquidity. "The statement was in line with expectations but the BoE has stated that the asset-buying programme remains under review," said Ian Stannard, senior currency analyst at BNP Paribas in London. The GBP/USD is currently trading at $1.6070 as of 21:30PM, London Time.

The number of Australians employed jumped 40,600 from August, the biggest gain in almost two years, cutting the jobless rate to 5.7 percent from 5.8 percent, the statistics bureau said in Sydney. The median estimate of 20 economists surveyed by Bloomberg was for the unemployment rate to increase to 6 percent. The Reserve Bank raised the overnight cash target on Oct. 6 to 3.25 percent from 3 percent, saying the risk of a “serious” contraction has passed. The Aussie increased as much as 2 percent 90.90 U.S. cents, the strongest level since August 2008, on speculation an unexpected drop in Australia’s jobless rate will encourage its central bank to widen the extra yield earned on short-term money market securities. The AUD/USD is currently trading at 0.9060 as of 21:37PM, London Time.

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