Forexpros – The U.S. dollar trimmed gains against its major counterparts in volatile trade on Wednesday, but investors remained jittery as fears that the debt crisis in the euro zone is deepening pressured regional bond yields higher.
During U.S. morning trade trade, the dollar was up against the euro, with EUR/USD slipping 0.09% to hit 1.3533.
Concerns over the ability of European leaders to stem the region’s debt crisis pressured the yields of core euro zone economies, with the yield on French 10-year bonds briefly rising to a euro-era high earlier, before falling back.
The yield on Italian 10-year bonds peaked at 7.09%, before falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term.
The greenback was also stronger against the pound, with GBP/USD shedding 0.31% to hit 1.5772.
The Bank of England’s quarterly Inflation Report released earlier said economic growth will be “significantly weaker” than forecast in August and indicated that the bank may have to add to its GBP275 billion asset purchase program as the economic outlook deteriorates.
The report came after official data showed that the unemployment rate in the U.K. jumped to a 15-year high of 8.3% in October, while the number of people without a job on the wider ILO measure rose to a record high.
Meanwhile, the number of people claiming jobless benefit rose by 5,300 last month, far below analysts’ forecasts of a rise of 20,400.
Elsewhere, the greenback was lower against the yen but climbed against the Swiss franc, with USD/JPY dipping 0.06% to hit 76.97, and USD/CHF rising 0.17% to hit 0.9163.
Earlier Wednesday, the Bank of Japan left interest rates unchanged and cut its economic outlook amid uncertainty over the global economic outlook and the deepening debt crisis in the euro zone.
The bank also said that it may implement new stimulus measures if the yen continues to appreciate after climbing to postwar highs against the greenback last month.
The greenback was also higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.07% to hit 1.0217, AUD/USD shedding 0.37% to hit 1.0139 and NZD/USD falling 0.43% to hit 0.7678.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.11% to hit 78.19.
Also Wednesday, official data showed that U.S. industrial production rose more than expected last month, climbing 0.7%, beating expectations for a 0.4% increase.
A separate report showed that the U.S. consumer price index was down for the first time in four months in October, slipping 0.1%. Analysts had forecast CPI would be flat last month after rising 0.3% in September.
Excluding food and energy costs, consumer prices rose 0.1% in October, broadly in line with expectations, after rising by 0.1% in September.
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