Euro briefly hits 12-month highs.

US equities attempted to rally during Wednesday but were unable to sustain the advance and dipped into negative territory amid underlying reservations surrounding the economic outlook and reservations over the banking sector.

Global equities overall lost ground amid reservations over growth trends.

Overall moves in asset classes were dominated by risk conditions during the day.  After a brief recovery, fear tended to dominate later in the session. There was a tentative recovery in confidence on Thursday, but sentiment remained fragile with choppy underlying trading conditions.

EUR/USD briefly hit 12-month highs at 1.1095 on Wednesday but was unable to hold the gains as a fresh dip in equities sapped Euro support and triggered some dollar backing on defensive grounds.

The Riksbank increased interest rates by 50 basis points to 3.50%, in line with market expectations.

The bank expects rates to increase further, but the overall rhetoric was broadly dovish.

The US goods trade deficit narrowed sharply to a 4-month low of $84.6bn for March from $92.0bn the previous month with a significant gain for exports and a decline in imports. The trade position should provide a small lift to the first-quarter GDP estimate.

The flash reading for the US first-quarter GDP data will be released on Thursday with consensus forecasts for 2.0% growth. The jobless claims data may be more important for overall sentiment towards the US economy.

The Bank of Japan will announce its latest policy decision on Friday.

Consensus forecasts are for an unchanged policy, although there is some speculation that there will be a minor tweak in the yield curve control policy.

The Euro moves were influenced primarily by trends in risk appetite. EUR/USD jumped to 12-month highs at 1.1095 as the dollar dipped. The US currency index managed to hold above 12-month lows. EUR/USD dipped again as the dollar secured defensive demand as equities came under pressure. EUR/USD settled just above 1.1050 on Thursday.

The yen secured an element of support from risk aversion. USD/JPY dipped to 133.00 before a recovery to 133.70 on Thursday as US yields edged higher.

The Swiss franc was unable to make further gains despite fragile equities. EUR/CHF advanced to 0.9840 with USD/CHF recovering from 26-month lows near 0.8850 to trade around 0.8915.

Commodity currencies struggled to make headway even when the dollar retreated. AUD/USD settled close to 0.6600 before a recovery to 0.6630 on Thursday. Bank of Canada minutes revealed that the bank did discuss a rate hike at the April meeting. USD/CAD settled around 1.3640 as lower oil prices sapped support before drifting lower to 1.3620.

Economic Calendar

13:30US Advance GDP q/q2.0%2.6%
13:30US Unemployment Claims247K245K

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.