By William L. Watts, MarketWatch
NEW YORK (MarketWatch) — The dollar extended gains versus most major rivals Thursday after data showed a larger-than-expected drop in first-time jobless claims, while the euro continued to feel pressure versus the U.S. unit and a range of other currencies on rising expectations the European Central Bank will move to further ease monetary policy in an effort to stave off deflation.
The euro EURUSD -0.19% changed hands at $1.3754 in recent action, a loss of around 0.2% on the day. The euro had dipped below important support at $1.3750 in earlier action.
The shared currency has weakened since ECB officials this week, including Bundesbank President Jens Weidmann, signaled the central bank would consider negative deposit rates and a move toward outright quantitative easing.
“There was no major economic news today, but the market is finally starting to realize the diverging policy agendas of the ECB versus the Fed, the [Bank of England], the [Reserve Bank of Australia} and the [Reserve Bank of New Zealand] and the unit has weakened markedly against all those currencies,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.
The euro EURJPY +0.05% rose 0.1% against the Japanese yen to ¥140.69. The euro fell 0.3% versus the Australian currency EURAUD -0.29% to A$1.4892 and dropped 0.9% versus the New Zealand dollar EURNZD -0.92% to NZ$1.5867.
Spot trade in London hours was “generally characterized by more euro weakness, but the crucial factor here is where that weakness was concentrated: in the euro crosses rather than in euro/U.S. dollar,” said Stephan Gallo, strategist at BMO, in a note.
“The consequence, not the cause, was an approach of $1.3750” by the euro, he said. The Australian, Canadian and New Zealand dollars have been supported “partially because the U.S. data have underwhelmed so far this week, and the euro has fallen more versus the commodity bloc than versus the U.S. dollar.
“It appears that the bar for the U.S. data to cross may be higher whilst the Fed is still expanding the size of its balance sheet,” he said.
The U.S. unit rose versus the Japanese yen USDJPY +0.24% , fetching ¥102.30 versus around ¥101.90 in North American trade late Wednesday.
The ICE dollar index DXY +0.11% , which measures the currency against a basket of six rivals, rose 0.1% to 80.108. The WSJ Dollar Index XX:BUXX +0.05% , which measures the currency against a broader basket, rose to 73.35 from Wednesday’s close at 73.30.
The U.S. dollar added slightly to gains after the Labor Department said the number of people who applied for first-time weekly jobless benefits fell by 10,000 to 311,000 in the week ended March 20, the lowest level in four months. Economists had forecast claims of 320,000.
Also, the Commerce Department revised higher its estimate of fourth-quarter gross domestic product to an annualized growth rate of 2.6% from a previous estimate of 2.4%.
The Australian dollar AUDUSD +0.09% gained 0.2% versus the U.S. currency to 92.34 U.S. cents, while the New Zealand NZDUSD +0.73% and Canadian dollars USDCAD -0.08% also gained on the U.S. unit.
The British pound GBPUSD +0.24% rose 0.3% versus the dollar to $1.6629.
William L. Watts is MarketWatch's senior markets writer, based in New York. Follow him on Twitter @wlwatts.
