The US dollar weakened sharply early in the North American trading session after the release of weaker than expected US unemployment claims. The report comes a week after the disappointing non-farm payrolls report and so reinforced market expectations that the Fed will continue policy easing to spur growth. Initial jobless claims benefits jumped 13,000 last week to a seasonally adjusted 380,000. Forecast were for claims falling to 355,000 last week. The previous number was revised up to 367,000 from the previously reported 357,000.
Euro advanced higher in New York trading due to the weaker dollar, ignoring higher Italian bond yields after a debt auction today. EURUSD opened the NY session at 1.3139 and climbed to a one-week high of 1.3211.
Sterling showed little reaction to a worse than expected February trade deficit. GBPUSD took direction from the EURUSD and a weaker dollar helped lift the pair to 1.5983. This was the highest level since April 3.
EURJPY edged up slowly in a holding pattern from 106.36 to 106.79, rising in harmony with EURUSD. USDJPY on the other hand declined to 80.72 from 81.06, weighed down by the broadly weaker dollar after the US jobless claims report.
The Canadian dollar strengthened against its US counterpart after the US labour data, ignoring the weak Canadian trade data. Dollar and CAD were briefly near parity immediately after the US data but soon USDCAD fell down to 0.9939 from 1.0010. Speculation that the Fed will increase stimulus measures weakened the greenback. Also, rising commodity prices helped lift the commodity-linked Canadian dollar.
Crude oil, a major Canadian export, rose to as high as US$104.22, gaining over $16 on the day.