MW: Dollar slips; euro boosted as Spain sells debt
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — The dollar lost ground Thursday as European equities and U.S. stock futures advanced, while the euro gained as buyers continued to snap up Spanish government debt.
The ICE dollar index DXY -0.18% , which measures the U.S. currency against a basket of six major rivals, slipped to 79.680 from 79.807 in North American trade late Wednesday.
The WSJ Dollar Index XX:BUXX +0.13% , which measures the dollar against a slightly wider basket, was virtually unchanged at 70.61.
The dollar pared losses after data showed applications for first-time U.S. unemployment benefits fell 37,000 to a seasonally-adjusted 335,000 in the week ended Jan. 12 —the lowest level since January 2008. Economists had forecast a drop to 368,000, though it appeared the fall may have been due partly to a seasonal-adjustment quirk whose effects could quickly fade. See: U.S. weekly jobless claims drop 37,000 .
Data also showed U.S. housing starts rose by a stronger-than-expected 12.1% in December. See: U.S. housing starts jump 12.1% .
The euro EURUSD +0.4204% traded at $1.3371, up from $1.3288.
Spain sold a total of 4.5 billion euros of three existing bonds and notes Thursday. Spanish bond yields were little changed in the secondary market, with the 10-year yield ES:10YR_ESP +0.63% seen at 5.04% in recent action, according to FactSet.
“Someone, somewhere seems to be happy to hold Spanish debt, and this comes even though some of Spain’s biggest banks are planning to pay back the LTRO [long-term refinancing operations] money they borrowed from the ECB over the next few months, money that had been used to buy government bonds,” said Kathleen Brooks, research director at Forex.com in London.
“The markets are optimistic that the future will brighten up for Spain and other peripherals and growth will pick up later this year,” Brooks said, but warned that excessive optimism could yet undo the market.
The euro rose versus the Japanese yen EURJPY +1.5864% to trade at ¥119.42 versus ¥117.49. The euro had retreated versus the Japanese currency as yen bears aggressively covered shorts earlier this week.
The dollar USDJPY +1.1637% rebounded to ¥89.35 from ¥88.43.
Japanese Economics Minister Akira Amari on Thursday told The Wall Street Journal that he still believes the currency market is “in a phase of correcting from excessive yen strength.” Amari said his remarks on the yen earlier this week, in which he warned about the dangers of an excessively weak currency, had been misinterpreted.
The British pound GBPUSD -0.0587% traded at $1.6030 in recent action, up from $1.6006. The Australian dollar AUDUSD -0.3132% slipped to $1.0536 from $1.0572.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.
