The U.S. dollar is mixed across the board, higher versus the pound, the yen and commodity currencies, but down versus the euro as the shared currency was lifted by a well-received Spanish bond auction.
The yen came under pressure on Thursday, and USD/JPY regained the 89.00 level after Japan's economic minister Amari clarifications. Amari said his recent comments on the negative impact of yen weakness had been misinterpreted.
Meanwhile, stocks rose in Wall Street underpinned by positive U.S. data. Initial jobless claims fell more sharply than expected, to 335,000 in the latest week, while housing starts increase to 954,000 in December.
"The next event for financial markets to navigate is the latest batch of Chinese activity data, scheduled for tomorrow local time. Those figures are forecast to show a firming in GDP, retail sales and industrial output", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "So long as the figures confirm a strengthening Chinese economy, we suspect the market's optimism and the gain in foreign currencies can continue for the time being".
Euro resumes upside, 1.3400 in focus
EUR/USD managed to resume the upside and climbed to a high of 1.3375, propelled by a strong Spanish action and rumors that Ireland and Portugal could make requests to initiate the OMT program today. 1.3400 comes again as immediate bullish target for the cross ahead of its 2012 high of 1.3485. On the downside, 1.3300 is first support in line while only below the 1.3250/45 area the short-term pressure would increase, targeting the 1.3200 mark. The longer-term view, however, remains positive, even though daily indicators begin to lose momentum.
"The EUR is still on a bullish path from a technical standpoint on the daily and weekly charts, leaving U.S. favouring higher levels regardless", says the TD Securities team. "The spike higher has put the EUR at the top of the FX performance rankings overnight, lifting both EUR/USD and EUR/JPY toward the highs set earlier this week. For EUR/USD, breaking decisively into the 1.34 handle is the next major challenge, while for EUR/JPY 120.00/10 is the level to watch".
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