Forex Review – Euro surges against dollar and yen; oil hits 9-mth high

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The euro hit a fresh 2-1/2 month high against the dollar in the U.S. trading session and surged to its strongest level versus the yen in more than three months, despite a bleak economic forecast from the European Commission today. This was offset by strong German data which helped lift the single currency since the early European trading hours, boosted by better than expected German Ifo business sentiment index which hit its highest in seven months.

Market sentiment was further lifted after better than expected U.S. jobless claims numbers, which remain at four year lows, signalling an improving labour market in the world’s largest economy.

EURUSD rose to as high as 1.3371, the highest level since mid-December. Meanwhile, EURJPY surged to 106.98, its strongest since November 9 last year. EURGBP hit 0.8497, its highest level since December 12.

The U.S. dollar weakened against most risk currencies in the North American trading session, as demand for its safe haven quality was low in a risk-on trading environment today. The ICE dollar index which measures the U.S. currency against a basket of major currencies, fell to 78.677 from 79.207 Wednesday.

GBPUSD made up for some earlier losses to rise to 1.5738. Earlier in the day sterling hit as low as 1.5648 against the dollar after being hurt on Wednesday following  dovish Bank of England policy meeting minutes.

USDJPY retraced from a seven-month high reached yesterday, at 80.34, and dipped to 79.84 today. Dollar is expected to rally further as the yen is weighed down by the recent Bank of Japan policy easing.

Dollar fell by over 1 percent on the day against the Swiss franc, reaching a low of 0.9010 in the US trading session.

The weaker dollar helped support crude-oil prices which rallied to a nine-month high at $108.21. Also boosting oil prices was a supply report, showing a smaller-than-expected rise in inventories.

Gold gained $15 today to hit a three-month high of $1,787.04.

Silver tracked gold higher, almost 4 percent to peak at $35.59 an ounce, the highest since late September.