The euro gained as optimism returned to the markets on speculation that German Chancellor Angela Merkel and French President Nicolas Sarkozy will take more action to arrest the euro zone crisis and discuss these issues during their talks today. Meanwhile, the ECB began its government bond-buying program today as well. Euro accelerated its rise against the dollar after release of much better than expected U.S. non-farm payroll data, which gave a sigh of relief to markets that were concerned about the health of the U.S. economy. EURUSD rose to a high of 1.4210 from a session low of 1.4071.
Sterling rose against the dollar steadily throughout the session despite U.K. producer –price inflation data showed an acceleration in prices. Markets were focused on the more crucial U.S. non-farm payroll data that was due towards the end of the session. The report indicated that more than expected jobs were created, boosting market confidence that the world’s largest economy might be able to get on track to growth, which helps the global financial situation as well. Risk off sentiment boosted the Pound, with GBPUSD rising to 1.6321 from an early session low of 1.6244.
USDCHF was very volatile during the session in the build up to the U.S. non-farm payroll data. Investor nerves were jittery as concerns of a global recession worsened yesterday causing renewed demand for the Swiss safe haven currency. Disappointing Swiss CPI data early in the session briefly let dollar gain and also SNB warnings that it will take measures if necessary to curb the franc’s rise. On Wednesday the SNB cut rates in such attempts to weaken the currency from record highs in order to support hurting exporters. Better than expected U.S. jobs data helped boost market risk sentiment and the dollar jumped to 0.7705 against the franc from a low of 0.7633.
USDJPY spiked immediately after the U.S. non-farm payroll data which indicated more jobs were created than expected, consequently boosting the dollar to 79.07 yen from 78.63 within a minute of the news. This was a relief to the Bank of Japan which only yesterday intervened to curb yen strength which is hurting the export-reliant economy from recovering from the devastating March earthquake. EURJPY also rose to a high of 112.29 from a session low of 110.33.