The US dollar was weak versus the Japanese yen and against the euro amid risk aversion as Chinese markets tumbled again today while the yuan was devalued. Oil fell to fresh eleven-year lows along with the Canadian dollar.
There was a slew of Eurozone economic data out today which included German retail sales, the Eurozone economic sentiment survey results for December and unemployment figures and retail sales for November. The Eurozone unemployment rate showed a small drop in November to 10.5%, an October 2011 low. Eurozone economic and business confidence readings were higher than expected in December. Eurozone retail sales data disappointed with a drop of 0.3% month-over-month while German retail sales rose 0.2% month-over-month in November from a 0.1% decline the prior month.
Out of the US today, initial jobless claims fell more than expected and helped give the dollar a boost. The number of Americans filing for unemployment benefits dipped by 10,000 to a seasonally adjusted 277,000 in the week ending January 2, more than the estimated 275,000. Claims for the prior week were unrevised at 287,000. Focus now turns to the all-important nonfarm payrolls report due tomorrow with a prediction of 200,000 jobs created in December.
The dollar rose against the yen after the jobless claims data to a high of 117.85 yen by 14:00 GMT. Earlier in the session the pair had fallen to a four-month low of 117.32.
The euro popped back above $1.08 versus the dollar and was one of the best performing currencies on the day. Sterling dropped to a five-year low of $1.4532.
Brent crude traded below $35 a barrel, as the turmoil in China rattled investors. There are concerns of an oil glut, heightened by fears of slowing growth in China, which is a major consumer of commodities.
The oil-linked Canadian dollar weakened to its lowest in eleven years versus the greenback, with USD/CAD breach $1.41. The Australian dollar, a currency that is also sensitive to commodity prices, fell back below $0.70 versus the greenback to its lowest since September.
Gold has regained its safe haven status and rallied to its highest since November 6 above $1101 as investors flocked to safety.
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