Dollar Falls Further Versus Euro, Gains On Yen 

The dollar continued its downward spiral against the euro Thursday morning, as central banks on either side of the Atlantic appear set to take different approaches to monetary policy in 2011.

While the Federal Reserve in the U.S. has downplayed inflation and will likely maintain its massive asset purchase program, the European Central Bank has become more focused on rising prices in accord with their lone mandate to fight inflation.

That could mean the interest rate gap between the Euro zone and US could widen sooner than economists were expecting, boosting the euro's appeal.

In a unanimous decision Wednesday, the Fed kept its benchmark interest rate near zero and maintained its $600 billion asset purchase plan.

The dollar dropped to a new 2-month low of $1.3750 against the euro, having lost almost 9 cents over the past two and a half weeks.

There was little movement against other European majors, with the dollar holding at CHF 0.9430 againstthe Swiss franc and $1.5970 versus the sterling.

On the flip side, the dollar gained a bit of ground versus the yen after rating agency Standard & Poor's downgraded Japan's sovereign credit rating to AA-minus from AA, with the outlook on the rating seen as 'stable', citing the country's soaring debt. 

The dollar jumped back to Y83, staying away from November's 15-year low of Y80.22.

The Commerce Department will release its durable goods orders report for December at 8:30 a.m. ET. Economists expect a 1.6% increase in the orders for the month following a 0.3% decline in the previous month.

At the same time, the Labor Department will release its jobless claims report for the week ended January 22. Economists expect claims to edge up to 409,000 for the week from 404,000 reported last week.

Dollar Drops As ECB, BoE Hold Steady On Interest Rates 

The dollar extended this week's losses versus the euro and sterling Thursday morning in New York amid a pair of key interest rate decisions from across the Atlantic.

Policy makers in the UK and the euro area held steady on interest rates, as expected. However, traders will be looking closely at accompanying commentary from European Central Bank President Jean-Claude Trichet, who speaks at 8:30 am ET.

The Bank of England kept its key interest rate at a record low 0.5 percent, shrugging off recent figures showing inflation is heating up in the UK.

The ECB stayed at 1 percent, and with a sovereign debt crisis and severe austerity measures making growth difficult on the periphery of the euro area, the central bank is unlikely to move very quickly to tighten monetary policy.

The dollar dropped to $1.3175 versus the euro, moving back into December's narrow trading range. A short-lived rally took the dollar to a 4-month high of 1.2783 earlier this week.

A successful bond auction for Spain helped support the euro.

The dollar dropped to a monthly low of $1.5780 versus the sterling, and was stuck near Y83 against theyen.

Dollar Gaining Traction Ahead Of Employment Data

The dollar was steady Wednesday morning in New York ahead of a key prelude to Friday's pivotal jobs report from the federal government.

The ADP National Employment report, which sheds light on non-farm private employment, fro December will be released at 8:15 a.m ET.

At 10.00 a.m. ET, the ISM will release the results of its non-manufacturing survey for December. Economists expect that the non-manufacturing index show a reading of 56 for the month, slightly higher than 55 reported for the previous month.

The buck improved to $1.3250 versus the euro, picking up 0.5 percent. The pair has waffled back and forth around that mark for the past two months.

The buck continued its comeback against the Swiss franc, rising to CHF 0.9535 after hitting a record low of 0.92 last week.

There was little movement against the yen, with the dollar holding above Y82. Last week the dollaredged toward its recent 15-year low of 80.22 before finding its footing.

Dollar Fights Back Versus Aussie, Swiss Franc 

The dollar was mixed Tuesday morning in New York, gaining traction against the surging Swiss francand aussie dollar ahead of the latest news on the manufacturing sector.

Significant weakness in the final weeks of 2010 drove the greenback to a record low against the francand a nearly three-decade low versus the resource-backed Australian dollar.

The dollar was also on defense against other majors, dropping toward a 15-year low against the yenbefore finding support this morning.

The dollar rebounded to CHF0.9470 from an all-time low near CHF 0.9300. The aussie dollar bought US$1.008.

Modest overnight gains took the dollar to Y82.20 versus the yen, up from a 2-month low near Y80.90. A move to Y80.22 would take the dollar back to November's 15-year low.

The dollar drifted slightly lower to $1.34 versus the euro, nearing a 3-week low set on Friday.

Eurozone annual inflation breached the European Central Bank's target for the first time in more than two years.

The harmonized consumer price index, or HICP, rose 2.2% year-on-year in December, a preliminary estimate from the European Union statistical office Eurostat showed Tuesday. 

UK manufacturing activity expanded at the strongest pace in 16 years in December, reflecting production and new order growth, a closely watched survey showed Tuesday. At the same time, cost pressures continued to build up in the economy.

The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index for the manufacturing sector came in at 58.3 in December, up from a downwardly revised 57.5 in November.

The U.S. Commerce Department reports this morning on factory orders in November. Economists estimate factory good orders to remain unchanged, following an unexpected 0.9% decline in October.

The U.S. Federal Reserve Board will publish the minutes of its latest rate-setting meeting, and ABC News/Washington Post release the ABC consumer confidence index for the week ending January 2.

Euro Softens Versus Dollar Despite Lackluster US Growth Figures 

The euro remained on the defense against the dollar on Wednesday, even after official data showed the US economy grew slightly slower than expected in the third quarter.

Lingering concerns about sovereign debt on Europe's periphery continued to weigh on the single currency.

The euro weakened to $1.31, giving back its overnight gains in moving back toward a recent 3-month low near $1.2960.

The final reading on third quarter GDP showed the US economy grew a modest 2.6% from July through September.

The number was better than the 2.5% estimate given in November, but fell a bit short of economists expectations for 2.7% growth.

The GDP figures will likely overshadow the latest news on the beleaguered US housing market.

At 10.00 a.m. ET, the National Association of Realtors will release its report on existing home sales for November. Economists estimate existing home sales of 4.65 million for the month.

Simultaneously, the Federal House Finance Agency will release its house price index for the third quarter.

Earlier this morning, the Mortgage Bankers Association's Weekly Mortgage Applications Surveyshowed overall mortgage demand decreased 18.6 percent last week. Refinancing dropped sharply as interest rates edged higher.

The euro was able to hit a weekly high of 0.8510 against the sterling amid disappointing economic news from the UK.

Britain's economy expanded less than previously estimated as growth in the manufacturing, construction and services sectors was downwardly revised.

The Office for National Statistics on Wednesday lowered its economic growth estimate for the third quarter to 0.7% from the 0.8% growth estimated earlier.

Bank of England policy makers were conflicted about rates and bond purchases amid growing concerns about inflation, the minutes of their latest meeting revealed Wednesday.

The euro hit a 3-week low of Y109.40 against the yen, and a fresh record low of CHF 1.25 against theSwiss franc.

Euro Spirals Lower As Portugal, Spain Deny Bailout In The Works

The euro extended its losses Wednesday as officials from Spain and Portugal denied reports that theEuropean Union is pressuring them to work out a bailout.

Greece and Ireland have reluctantly accepted aid, but the EU is reportedly getting desperate to backstop the debt of the Iberian nations.

An article in FT Deutchland citing an unnamed source said majority of euro area countries and the European Central Bank are urging Lisbon to apply for a financial bailout from the European rescue fund.

It is hoped that a deal for Portugal would ease pressure on Spain, where banks are heavily exposed to Portugal. However, a spokesman for Portugal said the report was completely unfounded and that deep budget cut are in place.

Amid popular unrest aimed at derailing austerity measures, Portugal's government said Friday that the streamlined 2011 budget was approved by parliament.

Spanish Prime Minister Jose Luis Rodriguez Zapatero also rejected the notion that rescue was being negotiated for his country.

The prime minister, whose popularity is sagging following the announcement punishing austerity plans, said the government had undertaken strict reforms to trim the public deficit, and hit out at speculators who bet against the country.

Still, the euro fell further against the dollar, hitting a new 2-month low of $1.3199. Its been a brutal three weeks for the euro, which began November at a 10-month peak near $1.43.

The euro was stuck near last week's 2-month low of Y110.30 against the yen.

Against the sterling the euro hit a 2-month low of 0.8419 before improving to 0.8470.

German consumer price inflation rose to the highest level in more than two years, preliminary data from the Federal Statistical Office showed Friday. The consumer price index, or CPI, rose 1.5% year-on-year in November following the 1.3% increase in October.

The dollar continued to rally versus the euro and sterling Wednesday morning in New York, as the markets braced for a deluge of economic data ahead of the Thanksgiving holiday.

While Europe was still coping with the fallout from the controversial bailout of Irish debt, the dollar was supported by industry data showing a degree of resiliency in the housing market.

US mortgage applications for home purchases rose to their highest level in more than six months, the Mortgage Bankers Association said today.

"The increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation," said Michael Fratantoni, MBA's Vice President of Research and Economics.

The dollar rose to a fresh 2-month high of $1.3283 against the euro, having picked up a full ten cents since hitting a 10-month low near $1.43 three weeks ago.

German business sentiment rose in November to its best level in almost 20 years, Germany's Ifo said Wednesday. Germany's relatively robust economy stands in stark contrast to some of its less competitive euro area cousins, fueling talk that the euro may be short lived.

Meanwhile, the dollar rose to a new monthly high of $1.58 versus the sterling.

Against the yen, the dollar improved to Y83.35, staying within a stubborn trading range. The buck touched a 15-year low of 80.22 three weeks ago, and has stalled in its rebound attempt.

The Commerce Department will release its durable goods orders report for the month of October at 8:30 a.m. ET. Economists expect a 0.3% drop in durable goods orders for October, following a sharp 3.5% month-over-month increase in September.

The Bureau of Economic Analysis will release its personal income & outlays report for October at 8.30 a.m ET. Economists expect the report to show that personal income rose 0.4% and personal spending increased 0.5% in the month.

The Labor Department will release its customary jobless claims report for the week ended November 19th at 8:30 AM ET. Economists expect a small increase in claims to 442,000.

At 9.55 a.m. ET, the Reuters/University of Michigan's final report on the consumer sentiment index for November will be released. The consumer sentiment index is expected to be upwardly revised to 69.4 from the mid-month reading of 69.3.

The Commerce Department will release its new home sales report for October at 10 AM ET.

Dollar Stable As G20 Urges Market-Determined Currency Trade

The dollar was steady on Friday, holding on to this week's gains as the G20 outlined an agreement to unleash domestic demand in surplus countries.

With the White House saying this will support strong global growth and support a robust recovery in the US, the dollar continued to reverse its steep early losses from the past few months.

G20 members said they should refrain from competitive devaluation of currencies, but resisted US efforts to specifically push China on its currency, which the White House says is artificially weak. This gives Chinese exporters a big advantage over US manufacturers.

Commodity prices slumped and US stocks were poised for a sharply lower open this morning, as risk aversion bolstered the safe haven dollar.

Meanwhile, the debt crisis in Ireland continued to spook investors, and became a distraction to European leaders gathered in Seoul for the G20 Summit.

The dollar was stuck near $1.3700 against the euro as traders assessed headlines coming out of the G20 Summit in Seoul. Earlier this month, the dollar touched a 10-month low near $1.43.

Eurozone economic growth moderated more than forecast in the third quarter reflecting slowdown in all its major economies as many of them are undergoing fiscal squeeze.

The economy expanded 0.4% quarter-on-quarter in the third quarter, flash estimates from European Union statistical office Eurostat showed Friday.

The dollar was slightly weaker versus the yen, easing to Y81.90. Yesterday the buck hit a monthly high of Y82.78.

The buck was steady near $1.61 against the sterling, and briefly ticked above C$1.01 against its Canadian counterpart.

Currency and trade compromises came out of Seoul, as world leaders acknowledged the need for export-reliant nations to bolster domestic demand. However, the G20 agreed that measures to control their massive capital inflows should be "carefully designed."

Dollar Steadies Versus Euro Ahead Of Jobs Report 

The dollar was slightly stronger Friday morning, paring steep recent losses against the euro ahead of the US government's crucial monthly jobs report.

A dramatic decline to yearly lows for the dollar was brought on by the Federal Reserve's plan to bolster the economy with another $600 billion in asset purchases. The move was announced on Wednesday, but the buck had been falling since June as the Fed signaled its intentions.

The Labor Department will release its non-farm payroll report for October at 8.30 a.m. ET. Economists expect that the US economy added 60,000 new jobs during the month, after losing 95,000 jobs in the previous month. Economists, however, expect the unemployment rate to remain elevated at 9.6%.

The dollar improved to $1.4100 versus the euro, having touched a 10-month low of $1.4281 on Thursday.

Eurozone retail sales unexpectedly fell for a second consecutive month in September signaling that households in the currency block remain reluctant to increase their spending. According to data released by Eurostat on Friday, the volume of retail sales fell 0.2% month-on-month in September.

The buck was also steady versus the sterling, trading at $1.6230 after hitting $1.6298 -- its lowest since mid-January.
Versus the yen, the dollar barely budged near Y80.80. The dollar hit a 15-year low of 80.20 earlier in the week, but has managed to steady through the mid-term elections and Fed's QE announcement.

The buck edged slightly higher to C$1.0050 after coming withing a whisker of parity against its Canadian counterpart.
Canada's unemployment rate edged slightly lower in October, but the nation's economy generated only 3,000 new jobs, official data revealed Friday morning.

Statistics Canada said employment remained virtually unchanged for the second consecutive month, as full-time gains offset part-time losses. The unemployment rate edged down to 7.9% and has been around 8% for the past seven months, the agency noted.

In addition to the monthly jobs report from the US, traders will be treated to the National Association of Realtors Pending Home Sales for September. Economists expect that the pending home sales index rose 2.5% for the month, after registering an unexpected 4.3% month-over-month increase in the previous month.

At 3.00 p.m. ET, the Federal Reserve will release its report on consumer credit for September. Marketanalysts expect that consumer credit contracted by $3.5 billion for the month.

Dollar Uncertain Ahead Of GDP, Consumer Sentiment 

The dollar was little changed against other major currencies Friday morning, ahead of the latest figures on US gross domestic product and next week's meeting of the Federal Reserve.

Friday is shaping up to be a busy day, but traders may be sidelined amid contrasting reports about the size and scope of the Fed's expected commitment to another round of quantitative easing.

Adding uncertainty, the Senate hangs in the balance on next Tuesday's mid-term elections. The House of Representatives is widely expected to go back to the Republicans, while polls show that Democrats may retain a small majority in the Senate.

The dollar was stuck at $1.3850 versus the euro, having stabilized from steep recent losses this week. Earlier this month,the dollar hit an 8-month low of 1.4150.

The buck was sitting still near 80.75 versus the yen, staying near a recent 15-year low of Y80.40. Back in 1995, the dollar hit a record low of 79.80, and should move close to that if the Fed's asset purchase package is larger than expected.

An hour before the GDP release, the dollar was at $1.5925 versus the sterling, and fetched C$1.0225 against the loonie. Canada will also release GDP figures this morning.

The Bureau of Economic Analysis of the Commerce Department will release its advance estimate of third quarter GDP report at 8.30 a.m. ET. Economists project that the economy registered a nominal growth of 2% during the third quarter, following a revised 1.7% growth registered in the preceding second quarter.

At 8.30 a.m, ET, the Labor Department will release a report on employment cost index for the third quarter. Economists expect a 0.5% increase in the cost index for the quarter, same as in the preceding second quarter.

The results of the Institute of Supply Management-Chicago's business survey for October will be released at 9:45 a.m. ET. Economists expect the business barometer index based on the survey to come in at 57.5.

The Reuters/University of Michigan's final report on the consumer sentiment index for October will be released at 9:55 a.m ET. The consumer sentiment index is expected to be upwardly revised to 68 from the mid-month reading of 67.9.