The U.S. dollar traded in largely flat ranges against the majority of it counterparts even as global equities continue their rebound. However, the U.S. dollar fell dramatically versus the Swiss Franc as the Swiss National Bank refrained from announcing any new steps to curb the franc’s gains. The SNB tends to announce measures to weaken the franc on Wednesday mornings. The Swiss government said on Aug 3. it welcomed measures to curb the franc gains, while the central bank boosted supplies of the currency on Aug 10. to erode its value. Finance Minister Eveline Widmer-Schlumpf also said Aug. 17 that she supported “any” measure deemed appropriate by the central bank, including a possible currency peg. Market participants had priced in some sort of intervention or verbal rhetoric against the franc strength, but the failure of anything to materialize has pushed the franc stronger. Meanwhile, the U.S. economic docket showed that private companies in the U.S. added 91K workers to payrolls in August, according to data from ADP Employer Services. The median forecast of economists surveyed by Bloomberg News called for an advance of 100K. Non-farm payrolls and the unemployment rate will be released on Friday.
The Euro held a tight range against the U.S. dollar but weakened against most of its peers as data showed euro-region unemployment held at 10.0% in July, the European Union’s statistics office in Luxembourg said in a statement today. At 21.2%, Spain had the highest jobless rate. European inflation remained at 2.5% in August, above the central bank’s 2.0% target. ECB President Jean-Claude Trichet said earlier this week the bank is reviewing its assessment of inflation risks as economic growth in the region slows. The comments prompted bets that the central bank will cease raising its benchmark interest rate, following two increases this year to 1.5%.
The Japanese yen pushed modestly higher against its rivals as poor economic data from Europe to the United States bolstered demand for the safe-haven currency. The Japanese economic docket showed that the rebound in Japan’s industrial production after the March 11 earthquake may be coming to an end, making the nation’s recovery even more dependent on overseas demand. Factory output increased a less-than-expected 0.6% in July from June, the slowest gain since March.
The British pound is unchanged against the greenback but traded close to a three week low against the Euro after a report showed U.K. consumer sentiment fell in August, adding to signs the economic recovery is faltering. The London-based research group GfK NOP Ltd said an index of consumer sentiment slipped 1 point to minus 31 in July. Business confidence in the economic outlook also slumped this month to the lowest since 2009, Lloyds Bank reported yesterday. Market participants will now shift their focus to housing data tomorrow. The Nationwide Building Society will say tomorrow that house prices stagnated this month, after increasing 0.2% in July, according to a median estimate of economists.
