Forexpros – The U.S. dollar advanced sharply against most of its rivals Thursday, as negative comments by European Central Bank President Mario Draghi combined with domestically upbeat U.S. economic reports sent the greenback broadly higher.
During U.S. morning trade, the dollar was sharply higher against the euro, with EUR/USD tumbling 1.14% to hit 1.2385.
The euro came under broad selling pressure after ECB President Draghi stated that the economic outlook faces downside risks, adding that indicators for the second quarter point to weakening growth in the euro zone.
The ECB president stated that there was probably a “renewed weakness in economic growth” in the last three months, with “heightened uncertainty”.
Draghi also refused to speculate on the chances of a third round of Long Term Refinancing Operations, in which provides cheap loans to European banks in an attempt to encourage them to lend.
The comments came after the central bank cut its benchmark interest rate to a record low 0.75% in July, in a bid to bolster faltering growth in the region.
The central bank also lowered its marginal lending to 1.50% from 1.75% and the deposit facility rate to 0% from 0.25%.
The greenback was also higher against the pound, with GBP/USD giving back 0.41% to hit 1.5524.
Earlier in the session, Bank of England policymakers voted to increase the stock of asset purchases financed by the issuance of central bank reserves by GBP50 billion to GBP375 billion, in order to shield the recession hit U.K. economy from the ongoing debt crisis in the euro zone.
The central bank reported, “The weaker outlook for U.K. output growth means that the margin of economic slack is likely to be greater and more persistent.”
The bank also left the benchmark interest rate unchanged at 0.5%, where it’s stood since March 2009, in a widely expected move.
Elsewhere, the greenback was higher against the yen and the Swiss franc, with USD/JPY adding 0.10% to hit 79.96 and USD/CHF surging 1.14% to hit 0.9696.
In addition, the greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD easing up 0.05% to hit 1.0135, AUD/USD adding 0.13% to hit 1.0289 and NZD/USD inching up 0.06% to hit 0.8041.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, climbed 0.87%, to trade at 82.95.
The greenback found support after positive U.S. employment data eased expectations for further monetary easing measures by the Federal Reserve.
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending June 30 fell to a seasonally adjusted 374,000, compared to expectations for a decline to 385,000.
The data came after payroll processing firm ADP said non-farm private employment rose by a seasonally adjusted 176,000 in June, easily surpassing expectations for an increase of 105,000.
A separate report showed that service sector activity in the U.S. grew at a slower rate than expected in June. The Institute of Supply Management said its non-manufacturing purchasing manager’s index declined by 1.6 points to 52.1 in June from a reading of 53.7 in May. Analysts had expected the index to decline by 0.7 points to 53.0 in June.
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