By ForexMansion.com
The US dollar is weaker against most major currencies. The euro continued to rally, underpinned by higher inflation and the ECB outlook. Te euro zone’s inflation rate rose to its highest level for 29 months in March, strengthening the case for the European Central Bank to raise interest rates for the first time in almost three years next week. The annual inflation rate jumped to 2.6% from 2.4% in February, according to the European Union’s Eurostat agency. Economists had been expecting the inflation rate to dip to 2.3% in March.
The Euro rose against most major currencies despite Irish fixed income markets which continued to remain jittery. Four of Ireland’s most important banks could need up to a total of €24 billion in new capital to stay viable, according to the Irish Central Bank.
The figure reflects the maximum that the central bank thinks will be needed to keep the core Tier 1 capital ratio of the country’s most important lenders above 6% of risk-weighted assets through 2013, under the most pessimistic scenario in a new round of stress tests.
Additionally, Portugal said Thursday it missed its 2010 budget-deficit goal and has been forced to revise previous-year figures. Portugal’s official statistics agency said the deficit stood at 8.6% of gross domestic product in 2010, up from a target of 7.3%. Tomorrow traders will be focusing on the German PMI (755 GMT) and the EMU PMI (800 GMT), which could prove the catalyst to push the EUR/USD above 1.4250.
In the US, Initial jobless claims fell by 6,000 to a seasonally-adjusted 388,000 in the week ended March 26, according to the Labor Department. The prior week’s figures were revised up to 394,000 from an originally reported 382,000. Economists surveyed had forecast claims would fall by 2,000 in the latest week. The four-week moving average of new claims, considered a more reliable indicator because it smoothes out volatile weekly data, rose by 3,250 to 394,250 in the week ending March 26. Tomorrow’s Non-farm payrolls and employment rate (1230) will be market moving events.
Originally posted here
