Dollar pares gains on rise in euro and sterling

The greenback pared intra-day gains made in Asia and European morning and ended mixed on Thursday due to a strong rebound in the single currency and as cable jumped in New York on renewed Brexit optimism after early selloff on Bank of England's dovish hold.  
  
Reuters reported U.S. initial claims for state unemployment benefits totaled a seasonally adjusted 860,000 for the week ended Sept. 12, compared to 893,000 in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 850,000 applications in the latest week. Claims are more than four times their level at the beginning of the year.   
  
Versus the Japanese yen, although dollar rebounded to 105.17 in Asian morning, price met renewed selling and later fell to a fresh 6-month low at 104.53 in Europe on usd's weakness together with retreat in U.S. Treasury yields before recovering to 104.84 in New York due to strong bounce in U.S. equities and yields.  
  
Reuters reported the Bank of Japan kept monetary policy steady on Thursday and offered a slightly more upbeat view of the economy than in July, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic.     
At the two-day rate review that ended on Thursday, the BOJ maintained its -0.1% short-term interest rate target and a pledge to guide 10-year government bond yields around zero. The decision was made by a 8-1 vote.   
  
The single currency went through a roller-coaster rise. Although price fell from 1.1819 in Australia to a 1-month low at 1.1738 in Asia on usd's strength, price erased intra-day losses and later rose to session highs at 1.1852 in late New York afternoon on renewed selling interest in the greenback before stabilising.  
  
The British pound went through a volatile session. Although cable fell from 1.2974 in Australia to 1.2902 in Asia morning on usd's strength, price then rose to 1.2982 in Europe on cross-buying in sterling and renewed dollar's weakness. However, the pair then erased its gains and tumbled to 1.2866 at New York open after Bank of England's dovish hold. However, price then briefly jumped to session highs at 1.2998 after European Commission President von der Leyen said EU-UK trade deal is still possible before moving sideways.  
  
Reuters reported the Bank of England said on Thursday it was keeping its benchmark interest rate at 0.1% and it left unchanged the size of its bond-buying programme at 745 billion pounds ($966 billion).  The bank also said that policymakers had been briefed on how a negative rate could be implemented "should the outlook for inflation and output warrant it at some point during this period of low equilibrium rates."       
While the European Commission President Ursula Von der Leyen said she was convinced a trade deal with the United Kingdom was still possible, the Financial Times reported on Thursday.     Talks between the EU and the UK should continue, with the dispute kept at arm's length from the sides' future relationship negotiations, which centre on a trade deal, the FT report added, citing Von der Leyen.   
  
In other news, Reuters reported Britain said it would ask parliament for permission to use powers which breach its Withdrawal Agreement with the European Union if it decides Brussels has not acted in good faith, the government said on Thursday.   
  
Data to be released on Friday :  
  
Japan nationwide core CPI, nationwide CPI, Germany producer price index, UK retail sales, retail sales ex-fuel, Italay industrial orders, industrial sales, EU current account, U.S. current account, leading index change, University of Michigan sentiment index, and Canada retail sales, retail sales ex-autos, wholesale trade.