USD: The US dollar remained weak in the New York trading Wednesday after a Chinese official called for greater reserve diversification. US equity markets all closed down sharply with embattled financial stocks driving the declines. On the data front, strong Q3 GDP growth was reflected in a surge in productivity and a decline in unit labour costs. Productivity exceeded expectations, increasing at an annualized 4.9%, its fastest pace in four years, while unit labour cost declined 0.2% in Q3. Looking ahead, weekly jobless claims are due out later in the States today with Bernanke also due to testify before the Joint Economic Committee.
EUR: The Euro rallied after the comment from the Chinese official and traded to a high of 1.4731 before closing around 1.4650. On the data front, Germany’s industrial production increased 0.3% m/m in September, well above the expected 0.3% decline. Later today in Europe, the ECB is expected to make no change to rates of 4.00%. ECB President Trichet will hold a press conference.
JPY: USD/JPY hit a three-month low against the yen and stayed pressured against other currencies on Thursday as a plunge in U.S. stocks overnight kept intact expectations for another Federal Reserve interest rate cut next month. Dollar selling had not been that severe against the yen, but it has now spread to this pair, indicating that downside risks to the U.S. currency are growing. The dollar was trading around 112.70 yen in late U.S. trade on Wednesday after falling to a three-month low of 112.00 yen earlier this session. Traders said the dollar's recovery was due to buying from Japanese importers. Traders said the yen could gain against the dollar and high-yielding currencies on slides in Asian equities, which would prompt risk-averse investors to unwind carry trades in which they use low-yielding yen to buy higher-yielding currencies and assets.
AUD: Australia employment rose 12,900 in October mainly due to 70,600 full-time jobs being added. The unemployment rate rose to 4.3 percent and the participation rate was steady at 65.0. Forecasts centered on a rise of 20,000 in employment, the unemployment rate holding steady at 4.2 percent and the participation rate steady at 65.0 percent. The Australian dollar edged lower after a softer than expected headline jobs figure added to the dour sentiment caused by growing risk aversion which has prompted investors to dump high-yielding currencies and stocks.
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