The dollar extended its rally against the yen today after upbeat US initial jobless claims data that indicate the labour market continues to strengthen. This pleased the markets because any jobs-related data is closely watched by the Federal Reserve as the timing of the first rate hike is data-dependent. On Wednesday, Fed Chair Janet Yellen reiterated this while talking at a press conference following the FOMC statement. The dollar surged after Yellen sent signals to the markets that the Fed could begin raising rates as early as April 2015.
Data today showed the number of Americans filing new jobless claims fell in the week ending December 13 by 6,000 to a seasonally adjusted 289,000 despite forecasts for claims to actually rise up to 295,000.
The dollar rose on the news to reach as high as 119.30 yen. The dollar is up 2.5% so far today since the open of trading on Wednesday.
The Swiss franc was a big mover today after the Swiss National Bank surprised the markets by announcing a negative interest rate at minus 0.25%. The aim is to weaken the franc and to deter investors using the currency as a safe haven. The dollar rose to 0.9846 against the franc in reaction to the news.
The euro fell versus the dollar to 1.2265. Upbeat German Ifo data today was shrugged off as risk aversion is the near-term driver of the single currency, due to market volatility and the Russian crisis.
Sterling was lifted by strong UK retail sales numbers. On a monthly basis retail sales rose by 1.6%, while on a year-on-year basis, sales rose 6.4% compared with November last year, the highest annual increase since May 2004. The pound rebounded off a near 1-year low hit yesterday to rise to 1.5664.
Markets will now look ahead to Friday’s Asian session which will see the release of the Bank of Japan policy statement.