The euro slipped against the dollar today as doubts over a lack of concrete policy measures to tackle the euro zone debt crisis hit sentiment and pushed peripheral debt yields up. It looks as if the market has got a bit ahead of itself with the euro as concrete policy measures to address the debt crisis are unlikely to materialize before the end of March. The single currency was down 0.6% against the US dollar at USD1.3650.
Sterling was down 0.1% against the dollar at USD1.6077 ahead of the Bank of England interest rate announcement at 1200 GMT. The currency fell briefly after the Bank of England's monetary policy committee decided to keep interest rates on hold while UK March gilt and short sterling futures edged higher. Sterling fell to a session low of USD1.6017 soon after the announcement from around USD1.6055. It recouped those losses, but was still 0.3% down for the day.
EUR/GBP rallied today to a European session high of 0.8519 in a knee-jerk reaction to the Bank of England's 12:00GMT decision to keep Bank Rate at 0.5%, with an approximate 31 pip drop to an intra-day low of 0.8477. A large 0.8475 option strike rolls off at today's 10am Eastern Time NY cut (15:00GMT).
The Swissie was soft versus the dollar and euro today ahead of Swiss consumer price data as investors' grew more confident about the global economy and invested less in safe haven currencies such as the franc. The franc was 0.3% weaker against the dollar at USD0.9607 per dollar. Swiss consumer sentiment data published today highlighted once again the healthy state of the Alpine economy as the confidence index rose to 10 points in the January from 7 points in the previous quarterly survey.
Ongoing demand for shorter dated USD/JPY upside strikes has seen 1 week 25 delta reversals paid up at 0.75 for the JPY puts this morning from 0.5 yesterday. We have also seen 1month 25 delta reversals slip back to the more familiar 0.25 for JPY calls from rates nearer 0.4 at the start of the week. The U.S. Labor Department reported that initial state jobless benefit claims fell to 383,000 in the latest week. Markets were expecting claims of 410,000.The dollar rose to 83.15 yen after the data from around 82.92 yen prior to the release.