EUR & GBP Buoyed by Korman Tam

The dollar relinquished its earlier gains against the majors, slipping back beneath the1.50-level versus the euro and remaining mired past the 1.66-handle against the British pound. The Dow Jones and S&P 500 were higher on the session, while crude oil held steady above the $80 per barrel mark. The initial catalyst for the greenback’s reprieve was speculation overnight that China would soon mitigate its economic stimulus packages, tempering the shift to riskier assets.

There was a barrage of G7 economic reports released on Thursday. The US data included weekly jobless claims, the September leading economic indicators index and August monthly home prices. Weekly jobless claims unexpectedly crept higher to 531k from an upwardly revised 520k in the previous week. The August monthly home price index revealed further declines, down 0.3% versus a 0.3% increase in July and lower by 3.6% compared with a year earlier at -4.2%. Lastly, the September leading economic indicators index beat consensus estimates, climbing to 1.0% from a downwardly revised 0.4% from August.

Dollar Edges Higher by Korman Tam

The dollar was mixed against the majors, climbing higher against the euro to 1.4628 but sliding versus the British pound past the 1.64-level to 1.6419. Spot gold rose to a new record high above the $1,080-mark to $1,083.50 per ounce while crude oil continued to trade beneath $80-per barrel.

The US economic reports released earlier today saw September durable goods and factory orders. The headline durable goods orders increased by 1.4% in September versus 1.0% previously, while the ex-transportations figure rose by 1.2% from 0.9% in August. Meanwhile, factory orders reversed the 0.8% decline in August, increasing by 0.9%.

The key highlight on Wednesday will be the ADP private sector payrolls, which are seen improving to reflect a loss of 188.0k jobs in October from 254.0k jobs a month earlier. Also due out tomorrow will be the October non-manufacturing ISM report, estimated to improve to 51.8 from 50.9 in September.

USD Edges Up Ahead of Jobs by Korman Tam

The dollar was higher by the afternoon Thursday session as traders took to the sidelines ahead of tomorrow’s key US labor report. The greenback rebounded from a near one-week low against the euro around 1.4917 to bounce toward the 1.48-figure.

The economic reports released this morning included weekly jobless claims, Q3 productivity and Q3 labor costs. The weekly jobless claims improved to 512k versus an upwardly revised 532k in the previous week. Meanwhile, Q3 productivity blew away consensus estimates for a decline to 6.4%, instead surging to 9.5% from 6.9% in the previous quarter – its highest level in the third quarter since 2003. The preliminary reading for labor costs in Q3 declined by more than expected, falling by 5.2% compared with a 6.1% drop in the previous quarter.

Traders will look ahead to Friday’s key economic reports, consisting of the October unemployment rate, non-farm payrolls, September wholesale inventory and sales, and consumer credit. Consensus estimates are looking for the unemployment rate to climb to new multi-decade high at 9.9% from 9.8% in September. Meanwhile, non-farm payrolls are seen improving to 175.0 jobs lost in October compared with 263k jobs shed in the previous month.

Pound Pares Losses After Exaggerated Rally

The pound reverted its losing trend from last week’s end, specially versus the euro, as traders interpreted the winning streak as inadequate, as U.K. could be starting its first signs of economic recovery.

The pound has been facing extreme volatility as investors remain confused regarding the directions it may take in currency markets, considering the actual conjecture of the British financial scenario. Today, the pound rose specially versus the euro, as even if the U.K. posted negative growth numbers last week, analysts suggest that next quarter will bring back optimism towards the United Kingdom’s economy.

EUR/GBP traded at 0.9109 as of 21:45 GMT from a previous rate of 0.9235 yesterday.

Yen Trading Higher as Stocks Tumble

The Japanese currency ranked among the best performers in currency markets after several days of losses as stocks declined worldwide, attracting traders to the safety provided by yen-priced assets, and favoring also safer bets in financial markets globally.

The South Korean won was one of the biggest losers versus the yen after climbing sharply due to a report showing a significant quarterly growth for the Asian emergent nation, in a movement that can be understood as a correction by traders. One of the biggest winners today, but still losing against the Japanese currency was the Australian dollar, that benefited from side effects of a Chinese official statement suggesting that industrial production is growing massively in the country, which is good for the South Pacific nation since Australia is a major provider of commodities to China. The Swedish krona also lost significantly versus the yen as the country is still suffering from central bank statements last week that affirmed that interest rates will remain low until next year.

Most analysts concord that financial markets are having a moment of correction this week after stocks and higher-yielding currencies touched the highest levels in 2009 last week. Even if this Tuesday is producing rather negative numbers, most of traders are still expecting gains in riskier assets towards the end of the year.

EUR/JPY traded at 136.47 as of 14:00 GMT from a previous rate of 138.49 in the intraday. GBP/JPY traded near stability at 150.35.

Canadian Dollar Strengthens on Decline Speculations

The Canadian dollar had the first session of recovery versus the greenback and several other major currencies after traders speculated that the current losing streak was not reflecting the present status of the Canadian economy, which is being one of the most resilient among wealthy nations.

Even if Bank of Canada policy makers are constantly stressing on the fact that loonie rates should go down to ensure a fast recovery for the Canadian economy, the loonie gained today after several days of negative performance, after investors interpreted BOC statements as not-so-relevant compared to fundamental data regarding the Canadian economy during the past quarter, which is indicating a solid and resilient economy. The loonie gained today versus almost all major traded currencies except the yen, which gained significantly as investors opted for safety in a day of bearish performance in equities and commodities markets.

Analysts agree that even if policy makers are affecting the loonie’s perform in the short-term, the sentiment towards the Canadian currency remains very positive, as it’s back by crude oil rates, one of the main Canadian exports to the U.S., as also on the North American national economic fundamentals, which are better than most economic regions throughout the world.

USD/CAD traded at 1.0647 as of 20:43 GMT from 1.0716 hours earlier

Sweden’s Krona Down Further on Economic Outlook

The Swedish currency has been one of the biggest losers in the European currency market as producer prices declined again in September, raising concerns towards the economic recovery in the country.

Since Riksbank affirmed that interest rates in Sweden will continue at record low levels to stimulate the economic growth in the Nordic country, the krona has been having negative sessions which aggravated today after producer prices fell in September, evidencing the fragility of the Swedish economy.

USD/SEK closed today at 6.9705 from an opening rate of 6.8691.