The dollar weakened further against its peers today reaching its lowest level in three and a half months as doubt surrounding rate increases by the Federal Reserve saturated the market.  The dollar posted steep losses yesterday following the release of poor US service sector data and less hawkish remarks from the Fed which caused the market to delay predictions of when additional rate increases would be introduced.  US jobless claims totaled 285,000 last week increasing by 8,000 which was greater than expected.  Investors eagerly await January’s US nonfarm payroll report due to be released tomorrow for new signs of the labor market’s strength.  The US dollar index was down 0.83% trading at 96.44, a low not seen since October 23. 

The euro strengthened against the dollar with the pair gaining over 1% trading at 1.1222 off its session high of 1.1238 after having come off its session low of 1.1069 reached earlier in the day.  The euro was trading at 3 month highs as diminished expectations of a March Fed rate hike hit the dollar helping the euro to take advantage despite dovish remarks from European Central Bank President Mario Draghi.  The ECB’s monthly bulletin revealed concern and the retail PMI remains in negative territory.    

The pound retraced most of its advances against the dollar today trading at 1.4607 off its session high of 1.4667 after having come off its session low of 1.4528 reached earlier in the day.  The pound returned nearly all of today’s gains on the back of the Bank of England’s unanimous decision to keep interest rates unchanged at 0.5%.  The central bank also lowered its economic growth outlook.  The higher yielding pound was supported by buyers earlier in the session due to prevailing risk-on sentiment.   

The yen strengthened against the dollar with the pair losing over 1% trading at 116.62 off its session low of 116.52 after having come off its session high of 118.23 reached earlier in the day.  The yen has now trimmed its losses against the greenback following the Bank of Japan surprise move to introduce interest rates in below zero territory.  The yen continues to perform well this week having climbed roughly 370 points against the dollar taking advantage of poor US numbers.    

The Australian, New Zealand and Canadian dollars strengthened against the greenback as commodity associated currencies were widely supported to the upside even though oil prices came off highs reached earlier in the session.  Oil prices were unable to maintain upward momentum from solid gains posted in the previous session against a back drop of ongoing worry over the global supply surplus and chances of a deal to reduce production becoming dashed.  Interest rate uncertainty helped pressured the greenback lower. 

The Aussie was up 0.5% against the dollar with the pair trading at 0.7201 off its session high of 0.7242 after having come off its session low of 0.7153 reached earlier in the day.  The Aussie had been supported by an increase in business confidence.  The NAB quarterly business confidence index posted a reading of 4, up from a reading of 1 for the previous quarter.  The kiwi dollar gained 0.9% against the greenback with the pair trading at 0.6723 off its session high of 0.6747 after having come off its session low of 0.6641 reached earlier in the day.  The loonie was up 0.5% against the greenback with the pair trading at 1.3744 off 2 month lows of 1.3638 after having come off its session high of 1.3796 reached earlier in the day. 

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