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European Session – Euro rises above 1.09, dollar lifted by US jobless claims

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euro2The dollar rallied after today’s US data on trade and jobless claims. The greenback jumped to a high of 119.88, off a low of 119.44. The number of Americans filing initial claims for unemployment benefits unexpectedly fell last week by 20,000 to a seasonally adjusted 268,000 for the week ending March 28, while forecasts were for claims rising to 285,000. Focus now turns to tomorrow’s nonfarm payrolls, which are forecast to increase 245,000 last month.

Separate upbeat data showed the US trade deficit narrowed in February by 16.9 percent to $35.4 billion, the smallest since October 2009. Forecasts were for a deficit of $41.2 billion. Another report showed much better factory orders in February, rising 0.2% from a 0.7% dip the previous month.

In other news today, the European Central Bank released minutes of the March 4 policy meeting. The minutes showed that ECB policymakers are committed to the recently-implemented bond-buying program and to keep it in place “for as long as needed”. Meanwhile, Greece is still a concern. The Greek government delivered a full list of reforms but the IMF debt payment looms. The euro was surprisingly resilient today and rose to a high of 1.0904, the highest since March 27.

Sterling continued to trade in a choppy fashion, hitting lows of 1.4775 and highs of 1.4867. It came under pressure following data showing that UK construction PMI fell in March to 57.8. The main risk for the pound is the UK election uncertainty and will likely pressure the currency in coming weeks until the May 7 election day.

The aussie fell to a fresh 6-year low of 0.7532 versus the greenback. The Australian currency continues to suffer due to falling iron ore prices and the risk of an interest rate cut next week by the Reserve Bank of Australia.

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