Euro soared against the dollar today gaining 2 percent on the day as central banks agreed together to make additional liquidity available to lenders in order to prevent Europe’s debt crisis from threatening global economic growth. The US Fed, European Central Bank, Bank of England, Bank of Japan, Swiss National Bank and the Bank of Canada, all made it cheaper for banks to borrow dollars in emergencies by cutting dollar funding costs by 50 basis points. EURUSD jumped to 1.3515 in the early US session and eased to 1.3420 to take a pause.
The dollar fell against all of its 16 most-traded counterparts as investors sought higher-yielding assets after the central banks move was announced to slash borrowing costs and safe haven flows continued out of the greenback. The dollar index, which measures the performance of the greenback against a basket of six major currencies, dropped to 78.332, from 78.990 on Tuesday. Positive US jobs data cold not take the spotlight from the central bank news which dominated today. ADP private sector jobs increased by 206,000 in November, beating estimates of 131,000, and rising from the prior 130,000.
Sterling gained 1.5 percent against the dollar on the day, peaking at a day high of 1.5757 on upbeat sentiment. After the big jump, GBPUSD consolidated to 1.5682.
Against the Japanese yen, the dollar plunged 1.1 percent in the session to fall to 77.28 from 78.14. EURJPY gained 1.2 percent to 104.56 from 103.32.
The Canadian dollar strengthened to its highest level against the US dollar in two weeks due to the boost in risk appetite in markets today after the central banks new liquidity measures. The loonie was given an added boost by positive domestic data which showed Canada’s gross domestic product grew at a faster rate in the third quarter than forecast, spurred by the biggest jump in exports since 2004. GDP grew at a 3.5 percent annualized rate in Q3 following from a previous contraction of 0.5 percent contraction. USDCAD fell to 1.0122 from the day high of 1.0362.