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The dollar jumped to its highest level in seven months versus the euro Thursday morning in New York, and extended its recent gains versus the sterling, as traders geared up for key interest rate decisions from across the Atlantic.
The Bank of England decided to retain the key interest rate at a historic low of 0.5%. The decision came in line with economists' expectations. The BoE also maintained the stock of asset purchases financed by the issuance of central bank reserves at GBP 200 billion.
The European Central Bank is expected to keep its benchmark interest rate steady at percent at 7:45am ET. The focus will be on ECB head Jean-Claude Trichet at 8:30 am ET, when he makes comments on the euro area economy, which has been saddled with debt problems faced by Greece and Spain.
Markit Economics reported on Thursday that the Germany construction purchasing managers' index stood at a seasonally adjusted 40.2 in January, down from 46.8 in the previous month. A reading above 50 indicates expansion, while one below suggests contraction.
Looking at the US economic calendar, the US Department of Labor will release the customary weekly jobless claims report for the week ended January 30, at 8.30 a.m. ET. Economists expect that the jobless claims decline to 455,000 for the week.
Also, the Department of Labor will release a preliminary report on non-farm productivity growth as well as unit labor costs for the fourth quarter at 8.30 a.m ET. Economists expect that non-farm productivity rose 6.5% during the quarter following 8.1% growth in the preceding third quarter.
Both will be overshadowed by Friday's monthly jobs report from the Labor Department.
The dollar surged to 1.3826 versus the euro, extending its dramatic recent uptrend. Against the sterling, the buck rose to a 3-month high near 1.5800.
The buck was firm above C$1.0630 against the loonie, and hovered about Y90 against the yen.
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