The dollar steadied after steep declines versus the euro and sterling on Thursday, but failed to recover staggering recent losses against a number of major counterparts, including the yen.
Relatively encouraging jobless claims data gave the dollar a bit of support versus the euro and sterling. Earlier, the dollar plunged to record lows against the aussie and Swiss franc while extending a 15-year trough versus the yen.
Traders are betting heavily that the Federal Reserve is about to crank up the printing presses once again in order to preserve the increasingly fragile US recovery.
Its been a dismal month for the dollar, as easing measures taken by the Japanese to weaken the yen clearly failed. Meanwhile, European policy makers remain reluctant to further ease monetary policy, lifting the value of the euro and sterling.
The European Central Bank Governing Council left its key interest rate unchanged at 1%for a seventeenth consecutive month on Thursday. Bank of England policy makers also stood still, keeping their key lending rate at 0.5% and maintaining their current asset purchase scheme.
ECB President Jean-Claude Trichet also said that economic recovery in the euro area should proceed at a moderate speed, with risk and uncertainty “still prevailing.”
The dollar slipped to an 8-month low of $1.4025 versus the euro before improving to 1.3925. A brutal three-month stretch has driven the dollar away from June’s 4-year high of 1.1805.
Japan’s currency intervention in September failed to stem the rise of the yen. The dollar dropped to a new 15-year low of Y82.10, as traders also shrugged of this week’s surprise interest rate cut by officials in Tokyo.
The buck hit its lowest ever against the aussie, which was boosted by strong Australian employment data. The bucked slipped to A$0.9917 in early dealing.
With the Bank of England holding steady on rates, the dollar dropped to $1.60 versus the sterling for the first time since February 3.
In a positive sign for the labor market ahead of the release of the monthly employment report on Friday, first-time claims for unemployment benefits unexpectedly fell last week.
The Labor Department said Monday that initial jobless claims fell to 445,000 through October 2, down from the previous week’s revised figured of 456,000. Economists had expected jobless claims to edge up to 455,000 from the 453,000 originally reported for the previous week.