The US dollar staged a small but significant recovery on Friday, helped by favorable US corporate news and recovering risk appetites.
The euro fell to US$1.5814 around 9pm GMT from US$1.5886 late on Thursday.
The dollar rose to ¥103.66 from ¥102.48 on Thursday.
“The main force behind the latest reappearance of risk appetite was a new 2008 low in equity volatility yesterday on the back of constructive earnings releases and outlooks by CEOs,” analysts at UBS wrote in a client note. “In that respect today’s announcement by a major US bank of a Q1 loss that was near consensus and considerably lower than in Q4 was constructive enough to further boost risk appetite.”
The bank in question was Citigroup Inc, which reported a US$5.1 billion net loss in the first quarter, half the US$10 billion loss it suffered in the fourth quarter of last year.
To some extent the dollar along with the pound also got a boost as the central banks of both countries sought to put some distance between their support for mortgage and credit markets from monetary policy, in turn allowing them to sound more hawkish on inflation.
The Bank of England is finalizing a plan that would see it accepting mortgage-backed assets in exchange for Treasury gilts in order to kick-start interbank lending back to life, a measure adopted earlier by the US Federal Reserve.
The Fed’s program is allowing rate-setters to “de-couple” their monetary policy from their support for financial markets and mortgage lending.
In late New York trading on Friday, the dollar stood at 1.0180 Swiss francs, up from SF1.0055 late on Thursday.
The pound was at US$1.9978, up from US$1.9918.
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