Investing.com - The U.S. dollar extended a rally against its major counterparts on Thursday, as investors dumped higher yielding assets as a combination of worries over the euro zone’s ailing banking sector and sovereign funding issues in the region outweighed strong U.S. jobs data.
During U.S. morning trade, the dollar remained sharply higher against the euro, with EUR/USD tumbling 1.02% to hit 1.2812.
Risk appetite was hard hit as concerns over the health of the euro zone banking sector intensified after a report on Wednesday showed that that overnight deposits at the European Central Bank reached an all-time high this week, indicating that European banks remain unwilling to lend to each other.
Meanwhile, shares in Italian lender UniCredit were down sharply for a second day, as the bank sold stock to increase capital.
Earlier Thursday, France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies in December, amid concerns over the handling of the financial crisis in the euro zone.
In the U.S., payroll processing firm ADP said non-farm private employment posted the largest monthly gain since December 2010 last month, increasing by a seasonally adjusted 325,000, blowing past expectations for an increase of 175,000.
The previous month’s figure was revised up to a gain of 204,000 from a previously reported increase of 206,000.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell more-than-expected, dropping by 15,000 to a seasonally adjusted 372,000, beating expectations for a decline to 375,000.
The greenback was also higher against the pound, with GBP/USD falling 0.81% to hit 1.5491.
A report earlier showed that service sector activity in the U.K. unexpectedly accelerated to a five-month high in December, easing concerns that growth in the country’s economy is faltering.
Elsewhere, the greenback was up against the yen and the Swiss franc, with USD/JPY adding 0.42% to hit 77.04 and USD/CHF rallying 1.03% to hit 0.9512.
A senior Japanese government official said that Japan will continue to closely monitor moves in the foreign exchange market and act appropriately after the U.S. criticized last years currency market interventions by Japan.
The greenback was also stronger against its counterparts in Canada, Australia and New Zealand, with USD/CAD advancing 0.65% to hit 1.0193, AUD/USD tumbling 1.03% to hit 1.0260 and NZD/USD falling 0.78% to hit 0.7812.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, surged 0.93% to hit 81.12.
Also Thursday, a report showed that service sector activity in the U.S. rose less-than-expected last month.
The Institute of Supply Management said its non-manufacturing purchasing manager's index rose by 0.6 points to 52.6 in December from a reading of 52.0 the previous month.
Analysts had expected the index to rise by 1.0 point to 53.0 in December.
During U.S. morning trade, the dollar remained sharply higher against the euro, with EUR/USD tumbling 1.02% to hit 1.2812.
Risk appetite was hard hit as concerns over the health of the euro zone banking sector intensified after a report on Wednesday showed that that overnight deposits at the European Central Bank reached an all-time high this week, indicating that European banks remain unwilling to lend to each other.
Meanwhile, shares in Italian lender UniCredit were down sharply for a second day, as the bank sold stock to increase capital.
Earlier Thursday, France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies in December, amid concerns over the handling of the financial crisis in the euro zone.
In the U.S., payroll processing firm ADP said non-farm private employment posted the largest monthly gain since December 2010 last month, increasing by a seasonally adjusted 325,000, blowing past expectations for an increase of 175,000.
The previous month’s figure was revised up to a gain of 204,000 from a previously reported increase of 206,000.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell more-than-expected, dropping by 15,000 to a seasonally adjusted 372,000, beating expectations for a decline to 375,000.
The greenback was also higher against the pound, with GBP/USD falling 0.81% to hit 1.5491.
A report earlier showed that service sector activity in the U.K. unexpectedly accelerated to a five-month high in December, easing concerns that growth in the country’s economy is faltering.
Elsewhere, the greenback was up against the yen and the Swiss franc, with USD/JPY adding 0.42% to hit 77.04 and USD/CHF rallying 1.03% to hit 0.9512.
A senior Japanese government official said that Japan will continue to closely monitor moves in the foreign exchange market and act appropriately after the U.S. criticized last years currency market interventions by Japan.
The greenback was also stronger against its counterparts in Canada, Australia and New Zealand, with USD/CAD advancing 0.65% to hit 1.0193, AUD/USD tumbling 1.03% to hit 1.0260 and NZD/USD falling 0.78% to hit 0.7812.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, surged 0.93% to hit 81.12.
Also Thursday, a report showed that service sector activity in the U.S. rose less-than-expected last month.
The Institute of Supply Management said its non-manufacturing purchasing manager's index rose by 0.6 points to 52.6 in December from a reading of 52.0 the previous month.
Analysts had expected the index to rise by 1.0 point to 53.0 in December.