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The dollar dropped again versus major counterparts Thursday, as a better than expected jobs report from the U.S. prompted traders to move into higher yielding currencies, especially the euro.
The buck dropped toward a yearly low versus the euro after the European Central Bank held its key interest rate unchanged at a record low of 1% for a fifth straight month.
The Bank of England held its rates at 0.5%, which came in line with economist expectations and subsequently saw little reaction in the currency markets.
Traders sold the world's safe haven currency after the U.S. Labor Department's weekly jobless claims report showed that first-time claims for unemployment benefits decreased by much more than expected in the week ended October 3rd.
Jobless claims came in at 521,000, down 33,000 from the upwardly revised 554,000 reported last week. The figure surprised economists who had expected claims to slow to 540,000 from the originally reported 551,000.
Further evident of today's risk appetite was today's upward move in the majority of global equity markets, while markets for safer financial instruments such as bonds suffered heavy losses.
The dollar set a fresh two-week low of 1.4817 against the euro. With the slide, the buck may be looking to test a one-year low of 1.4845 set in late September, following global concerns over the valuation of the currency on the heels of record stimulus spending in the U.S.
The dollar also extended its losses against the pound, setting a new nine day low of 1.6121 before finding support. The buck has seen modest downside in recent weeks after setting a four month high of 1.5771 September 28th.
The BoE has held its key interest rate at the lowest rate since the central bank was established in 1694. Policymakers also decided to continue with its program of asset purchases totaling GBP 175 billion financed by the issuance of central bank reserves. The MPC expects the program to take another month to complete.
The central bank is set to release the minutes of meeting on October 21st. Initially, the central bank introduced a GBP 75 billion program of asset purchases financed by the issuance of central bank reserves on March 5th. Later, the size of the quantitative easing was raised to GBP 125 billion on May 7th and again to GBP 175 billion on August 6th.
The greenback saw little change against the yen on the day, posting a quote of 88.4750. The dollar has found support after testing a 1995 low of 87.08, set back in January.
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