Dollar Woes Continues Amid Hope For Sustained Economic Recovery

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The dollar continued its downward spiral on Thursday, hurt by increased speculation that the global economic economic recovery is well underway.

Increased risk appetite has led traders to seek out risker assets and higher yielding currencies. Dollar weakness against the euro has driven commodities prices higher, exacerbating the buck's losses versus resource-linked currencies like the loonie.

As traders sifted through economic data and interest rate decisions from the UK and Canada, the dollar extended its yearly lows versus a basket of majors.

The buck dropped to 1.4612 against the euro, extending its nearly 9-month low. Since the early spring, when the economic skies seemed to brighten a bit, the dollar has been moving steadily lower against the euro.

The buck also fell further against the sterling, slipping to 1.6686 -- its lowest level in a month. With the loss, the dollar moved toward the lower end of this summer's relatively narrow range.

Early in the day, the Bank of England retained its interest rate at 0.50 percent for the sixth consecutive month.

The Monetary Policy Committee of the central bank also voted to continue its asset purchase programme totaling GBP 175 billion using the central bank reserves.

Later, the Bank of Canada maintained its key interest rate at at .25 percent and boosted its economic outlook Thursday morning, but signaled that persistent strength in the Canadian dollar remains a risk to growth.

The greenback weakened versus the loonie, easing nearly a penny to C$1.0780.

In economic news from the US, first-time claims for unemployment benefits decreased by more than expected in the week ended September 5th, according to a report released by the Labor Department on Thursday, with the data indicating that the pace of firings continues to moderate.

The report showed that initial jobless claims fell to 550,000 from the previous week's revised figure of 576,000.

With the value of imports increasing at a much faster pace than the value of exports, the Commerce Department released a report on Thursday showing that the U.S. trade deficit widened by much more than expected in July.

The report showed that the trade deficit widened to $32.0 billion in July from a revised $27.5 billion in June.

(Market News Provided by RTTNews)