The greenback fell against majority of its peers on Thursday as investors cautious awaited the release of U.S. jobs report to confirm the pace of upcoming rate hike to tackle inflation. Elsewhere, the British pound tumbled across the board after the Bank of England's expected 0.5% rate hike.
Versus the Japanese yen, dollar found renewed buying at 132.95 in Asian morning and gained to session highs at 134.42 in European morning. However, the pair then erased its gains and fell to an intra-day low at 132.77 on usd's weakness in tandem with US yields near New York close.
The single currency traded sideways in Asia before edging up to 1.0197 in European morning before briefly retreating to 1.0161 ahead of New York open. The pair then rallied to an intra-day high at 1.0253 in New York on usd's broad-based weakness together with cross-buying in euro especially vs sterling.
The British pound traded with a firm bias in Asia and early European trading, then spiked up briefly to session highs at 1.2220 (Reuters) on Bank of England's expected 0.5% rate hike. The pair then swiftly erased its gains and tumbled to an intra-day low at 1.2065 ahead of New York open on cross-unwinding in gbp long positions. Price then staged a short covering rebound to 1.2175 near New York close.
Reuters reported the Bank of England raised interest rates by the most in 27 years on Thursday, despite warning that a long recession is on its way, as it rushed to smother a rise in inflation which is now set to top 13%. Reeling from a surge in energy prices caused by Russia's invasion of Ukraine, the BoE's Monetary Policy Committee voted 8-1 for a half percentage point rise in Bank Rate to 1.75% - its highest level since late 2008 - from 1.25%. The 50-basis-point increase had been expected by most economists in a Reuters poll as central banks around the world scramble to contain the surge in prices. MPC member Silvana Tenreyro cast a lone vote for a smaller 25-basis-point increase.
In other news, Reuters reported Cleveland Federal Reserve Bank President Loretta Mester reiterated on Thursday that she will need to see several months of inflation coming back down towards the U.S. central bank's 2% target before policymakers feel they can let up on tightening monetary policy. "We're going to see variation in the numbers," Mester said during an event held at the Economic Club of Pittsburgh. "But that won't necessarily be compelling evidence. I personally need to see several months of inflation coming down."
Data to be released on Friday:
Australia AIG services index, Japan all household spending, coincident index, leading indicator, UK Halifax housing prices, France current account, trade balance, industrial output, imports, exports, non-farm payrolls, Italy industrial output, U.S. non-farm payrolls, private payrolls, unemployment rate, average weekly earnings, Canada employment change, unemployment rate and Ivey PMI.
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