EUR/USD
The euro dropped against the dollar on Thursday amid concerns that Portugal's largest financial institution may be in trouble. The parent of Portugal's largest bank, Banco Espírito Santo, said it missed payments on commercial paper to a few clients, which spooked markets by fueling concerns surrounding the soundness of the banking sectors in Portugal as well as in Spain and Italy. Elsewhere, weak euro zone factory data bruised the single currency. Italy's industrial output unexpectedly fell 1.2% in May from April, defying expectations for a 0.2% expansion, while French industrial production plunged 1.7% in May, also confounding expectations for a 0.2% gain. Meanwhile in the U.S., solid jobless claims numbers supported the greenback.
GBP/USD
The pound was steady at session lows against the dollar on Thursday after the Bank of England made no changes to monetary policy at its latest meeting, in a widely expected decision. The BoE left rates on hold at 0.5% and kept the size of its asset purchase program unchanged at £375 billion. The pound turned lower against the dollar earlier Thursday after official data showed that the U.K. trade deficit widened unexpectedly in May The Office for National Statistics reported that the U.K. trade deficit widened to £9.2 billion in May from a deficit of £8.81 billion in April. Economists had expected a deficit of £8.75 billion. Exports rose by 0.6% to £24.1 billion, while imports rose by a faster 1.7% to £33.3 billion. The stronger pound has raised concerns over the impact on exports from the U.K. Sterling has strengthened broadly this year amid expectations that signs of a deepening economic recovery will prompt the BoE to raise interest rates before the end of the year.
USD/JPY
The Japanese yen was slightly stronger against the dollar on Thursday ahead of a busy data day . Overnight, the dollar traded largely lower as investors opted to go long on stocks after the Federal Reserve confirmed market expectations for monetary stimulus programs to end this year, likely in October. The Federal Reserve said in the minutes of its monetary policy meeting earlier that it should end its monthly bond-buying program by the end of this year, likely in October, which sent investors chasing stocks on sentiments that the economy is recovering.
USD/CAD
The U.S. dollar moved higher against the Canadian dollar in risk-off trade on Thursday as renewed concerns over the stability of Europe’s financial sector hit market sentiment. Concerns over the financial health of Portugal’s largest lender sent European equities markets lower on Thursday, while futures pointed to a lower open on Wall Street. In the U.S. the Labor Department reported that the number of people who filed for unemployment assistance last week fell to a six-week low of 304,000, compared to expectations for an unchanged figure of 315,000. In Canada, official data showed that the new housing price index inched up by 0.1% in May, missing forecasts for a gain of 0.3%.
