The US dollar spiked higher against its major rivals in early Asian trading on Friday and touched new multi-month highs against the European majors. With the dollar on the rise, stocks tumbled around the world, intensifying risk aversion and interest in the world’s reserve currency.
The greenback touched 1.3671 against the euro around 8:05 pm ET Thursday, the highest level since May 20, 2009. This may be compared to Thursday’s New York session closing value of 1.3724. The euro-buck pair is presently worth 1.37 with 1.343 seen as the next likely target level.
The recovery process in the Eurozone economy is likely to be uneven, European Central Bank President Jean-Claude Trichet said Thursday, after the central bank retained key interest rate at a record low of 1%.
In his introductory statement, Trichet said this outlook remains subject to uncertainty. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, he added.
Against the Swiss franc, the greenback rose to more than a 5-month high of 1.0697 at the same time, compared to 1.0671 hit late New York Thursday. If the dollar-franc pair gains further, it may challenge resistance near the 1.071 level. The pair is presently quoted at 1.0660.
The US currency also surged higher to 1.5731 against the pound around 8:05 pm ET Thursday and this set the highest mark for the buck since October 13, 2009. The cable is currently quoted at 1.574, compared to 1.5758 hit late New York Thursday. If the greenback breaches the 1.571 resistance, it could set its strongest level in more than 8-1/2 months.
The Bank of England halted its GBP 200 billion bond purchase programme and retained its key interest rate on Thursday as policy makers assured these measures would continue to impart a substantial monetary stimulus to the sluggish UK economy for some time to come.
The US dollar drifted higher to 89.75 against the Japanese yen around 7:00 pm ET Thursday, compared to Thursday’s New York session closing value of 89.07. The greenback-yen pair held steady thereafter and is presently quoted at 89.7 with 90.6 seen as the next target level.
Looking ahead, Japan will release its preliminary leading and coincident indexes for December at 12:00 am ET. Analysts are looking for a score of 93.5 for the leading index – up from 90.7 in November. The coincident is expected to climb to 97.3 from 96.0.
From Europe, the French Trade balance and German industrial production-both for the month of December, U.K. January PPI and the Italian preliminary consumer price index for January are slated for release.
In the U.S., markets are closely watching the Labor Department’s monthly non-farm payroll report, which is due out at 8:30 am ET. Economists expect a rise of 13,000 jobs while the unemployment rate is forecast to rise to 10.1 percent.