After leaders at both the Bank of England and the European Central Bank surprised markets with monetary policy stances that were more dovish than previously, the U.S. Dollar broadly rallied during the Asian session. It appears that the Federal Reserve is now the only one of the world’s key central bank with any intent to take a more hawkish stance. Analysts believe that if today’s release of labor data supports an imminent Fed move, it could increase the upside momentum for the greenback though even a downside surprise is likely to have little enduring effect on the Dollar’s relative strength.
As reported at 11:31 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2903, after falling as much as 0.9% yesterday to a 5-week trough of $1.2883 after Mario Draghi said that ultra low rates were likely to remain in place well into the future. The GBP/USD also touched on a 5-week trough and was trading at $1.5026, dropping further from the 1.3% fall on Thursday after newly installed BoE governor Mark Carney said that future rate hike pricing was not warranted; the pair essentially gave back much of the gains it made earlier in the week.