Euro had a choppy day, swinging from a three-week high then falling, and rebounding in the U.S. trading session after better than expected US data. A report showed that Pending home sales in the U.S. rose more-than-expected to a seasonally adjusted 4.1 percent in March from 0.4 percent and beat forecasts for a 1.0 percent increase. This lifted market sentiment and helped offset some of the negativity from earlier disappointing data on high US jobless claims and low euro zone consumer confidence.EURUSD jumped to 1.3253 from 1.3197.
The dollar was softer against most of its major counterparts mainly as a result of the Federal Reserve policy meeting on Wednesday. The Fed reiterated that interest rates were unlikely to rise before late 2014 and it left the door open for further quantitative easing. This weighed on the USD.
Sterling rose against the weaker dollar and hit a fresh seven-month high of 1.6205 in European trading. GBPUSD consolidated gains and remained near those levels in the New York trading hours. The pound is in demand as an alternative investment to euro or dollar.
A less dovish Bank of England continues to provide important support for sterling with the growing UK interest rate advantage against the U.S. and euro zone. Speculation is still strong that the Bank of England will stay away from further quantitative easing at its next policy meeting. This is in contrast to the Fed, which signalled yesterday that it left the door open for more stimulus measures.
Yen is trading higher today against the dollar and euro compared to Wednesday, despite the Bank of Japan policy meeting tomorrow when policy makers are forecast to ease policy. The expectation is that the BOJ will increase the asset purchase program. This usually weakens the currency but today yen direction was mainly driven by safe-haven demand since markets were volatile today. USDJPY fell to a lone-week low of 80.65 before bouncing slightly in the U.S. session to 81.01. EURJPY fell to 106.47 before recovering to 107.26.
The weaker dollar helped lift gold, which has an inverse relationship with the dollar. Since a sharp drop following the Fed meeting, gold prices rose over $37 to $1,660 today, the highest in two-weeks.