Forex - Dollar broadly lower after weak U.S. data, ECB

Published 01/12/2012, 11:12 AM
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Investing.com - The U.S. dollar was broadly lower against its major counterparts on Thursday, following comments by European Central Bank President Mario Draghi and after weaker-than-forecast U.S. economic data.

During U.S. morning trade, the dollar was sharply lower against the euro, with EUR/USD rallying 0.79% to hit 1.2808.

The euro rallied after European Central Bank President Mario Draghi said the ECB saw "tentative signs of stabilization of activity at low levels" although the economy still faced "substantial downside risks."

The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.

Draghi also said the central bank’s recent refinancing operation has made a substantial contribution to improving the funding situation for banks in the euro zone and averting a liquidity crunch.

Sentiment on the single currency was boosted earlier after Spain sold twice the maximum targeted amount of EUR5 billion at auction, selling EUR9.98 billion in bonds maturing in 2015 and 2016, including a new benchmark bond at lower yields than in similar offerings in December.

An auction of Italian short-term government debt also met with solid investor demand at sharply lower yields.

The greenback was almost unchanged against the pound, with GBP/USD inching up 0.02% to hit 1.5334.

Earlier in the day, the Bank of England held the benchmark interest rate steady at 0.5% and announced no change to its GBP275 billion monetary stimulus program.

Elsewhere, the greenback was slightly lower against the yen and down sharply against the Swiss franc, with USD/JPY slipping 0.14% to hit 76.74 and USD/CHF tumbling 0.97% to hit 0.9447.

The greenback was mixed against its counterparts in Canada, Australia and New Zealand, with USD/CAD edging up 0.05% to hit 1.0201, AUD/USD dipping 0.02% to hit 1.0312 and NZD/USD shedding 0.48% to hit 0.7930.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.56% to hit 81.11.

In the U.S., official data showed that the number of people who filed for unemployment assistance in the U.S. last week unexpectedly rose to 399,000 from 375,000 the previous week.

A separate report showed that U.S. retail sales rose less-than-expected in December climbing 0.1%, falling short of expectations for a 0.3% increase, bringing the annualized rate of increase to 6.5%, down from 7.0% in the previous month.

Core retail sales, which exclude automobile sales, declined by 0.2% last month, confounding expectations for a 0.3% gain.


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