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Forex - Dollar higher vs. euro but trims gains against yen

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Forexpros - The U.S. dollar extended gains against the euro on Thursday, following remarks by European Central Bank President Jean-Claude Trichet, but trimmed gains against the yen as a dollar rally sparked by Japan's currency market intervention fizzled.

During U.S. morning trade, the greenback was sharply higher against the euro, with EUR/USD tumbling 1.27% to hit 1.4140.

Earlier in the day, ECB head Jean-Claude Trichet said the bank will conduct more cash operations to provide liquidity to banks over the next six months as the region's debt crisis deepens.

The central bank kept its benchmark interest rate unchanged at 1.5% in a widely anticipated decision, with Trichet saying that rates are still "accommodative" and inflation risks "remain on the upside."

The greenback was also down against the pound, with GBP/USD shedding 0.64% to hit 1.6321.

Earlier in the day, the Bank of England said it was maintaining the benchmark interest rate at 0.50%, as expected.

Elsewhere, the greenback trimmed gains against the yen and dipped against the Swiss franc, with USD/JPY up 2.35% to hit 78.86 and USD/CHF slipping 0.13% to hit 0.7692.

Earlier in the day, Japanese officials intervened in currency markets for the first time since March to curb the yen's gains and support the country's largely export-led economy, sending the yen sharply lower against all major currencies.

The Japanese intervention came one day after the Swiss National Bank cut its key lending rate to a narrower range calling the Swiss franc "massively overvalued."

In addition, the greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rallying 1.19% to hit 0.9734, AUD/USD tumbling 1.63% to hit 1.0579 and NZD/USD dropping 1.25% to hit 0.8526.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, jumped 1.33% to hit 75.18.

Also Thursday, official data showed that the number of people who filed for unemployment assistance in the U.S. last week fell unexpectedly.

The Labor Department said the number of individuals filing for initial jobless benefits in the week ending July 29 fell by 1,000 to a seasonally adjusted 400,000, confounding expectations for an increase to 406,000.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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