Previous session overview

The dollar turned higher Thursday, gaining after a pair of economic reports showed that the U.S. trade deficit unexpectedly shrank and that initial claims for jobless benefits fell.

The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.511 from 80.451.

The euro had spiked higher on the initial trade deficit headline, which came in better than expected, but as investors had time to dig into the details, they likely sold off the common currency and helped the Japanese currency to eke out a gain on the greenback, analysts said.

The dollar changed hands at JPY90.48 in recent activity, compared to JPY90.55 on Wednesday.

Getting factored into the action in currencies, the Labor Department said first-time claims for unemployment benefits fell to a seasonally adjusted 462,000 in the week ended March 6, down from a revised 468,000 in the prior week. Economists surveyed had been initial claims of 460,000.

The pound gained ground after the Bank of England's quarterly inflation expectations survey showed the public expects annual inflation of 2.5%, up from 2.4% in the previous survey.

The pound pushed back above the USD1.50 level to change hands at USD1.5007, up from USD1.4964 late Wednesday.

Market expectation

Investors are trying to balance economic data that continue to be uneven in many countries amid uncertainty of some countries' debt problems, namely Greece.

EURUSD holds USD1.3650 area now, seeing slight lift in recent trade on US custodial buys in moderate size, the pair still flounders inside the day's USD1.3620/87 range. Traders suggesting pair will break lower later, sees risk of a move to USD1.3575 area which should present a buying opportunity.

EURJPY is rallying as there appears to be a rebound in risk in recent trade. Gold is higher up to USD1108 off of its lows at USD1101.20 area. EURJPY has recovered off of its lows around the JPY123.20 area to recover to JPY123.55. Traders note a double bottom around the JPY123.16-JPY123.20 area as the equity markets claw back some of their earlier losses. The EURJPY is currently JPY123.53.

Pound recovery efforts looking labored, traders suggest, adding that any corrective pullback now has room to USD1.4975 (76.4% USD1.4947/1.5065-rising channel base) and still keep upside potential in focus. Resistance seen placed at USD1.5050 and stronger area between USD1.5065/75.

Disclaimer: the data made available by Dukascopy (Suisse) SAis for informational purposes only. Publication of this data by Dukascopy (Suisse) SA does not constitute provision of investment advice and Dukascopy (Suisse) SA assumes no responsibility with regard toany information, forecast or recommendation herein contained and assumes no responsibility with regard toany losses resulting from any activities conducted the basis of this data, including any investment decisions.

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