Forexpros – The U.S. dollar was sharply lower against its major counterparts on Wednesday, as riskier assets rallied after major world central banks announced coordinated measures to prevent a lack of liquidity in the global financial system and after a raft of stronger-than-expected U.S. data.
During U.S. morning trade, the dollar was sharply lower against the euro, with EUR/USD rallying 1.16% to hit 1.3468.
In a joint statement, the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank said they had agreed to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
The European Central Bank said the plan was aimed at reducing the credit-supply strain on households and businesses.
The surprise announcement came after the People’s Bank of China said that it plans to cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
Meanwhile, euro zone finance ministers were holding a second day of talks aimed at addressing the escalating debt crisis in the region, after agreeing on measures to expand the bloc’s bailout fund on Tuesday.
The greenback was also down against the pound, with GBP/USD surging 1.09% to hit 1.5768.
Elsewhere, the greenback weakened against the yen and the Swiss franc, with USD/JPY shedding 0.39% to hit 77.61, and USD/CHF tumbling 1.23% to hit 0.9094.
In Switzerland, a report earlier showed that the KOF economic barometer slid to a new low of 0.35 this month from 0.75 in October, signaling that economic growth is losing momentum.
In addition, the greenback posted steep losses against its Canadian, Australian and New Zealand counterparts, with USD/CAD dropping 1.60% to hit 1.0155, AUD/USD leaping 2.96% to hit 1.0295 and NZD/USD jumping 2.72% to hit 0.7814.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, tumbled 1.01% to hit 78.33.
Risk appetite was further boosted after a report from payroll processing firm ADP said U.S. private sector employment increased by a seasonally adjusted 206,000 in November, blowing past expectations for an increase of 130,000.
The previous month’s figure was revised up to a gain of 130,000 from a previously reported increase of 110,000.
A separate report showed that manufacturing activity in the Chicago area rose more-than-expected in this month, climbing to a seven-month high.
Also Wednesday, the National Association of Realtors said U.S. pending home sales jumped 10.4% in October and were 9.2% above the same month last year.
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