The euro held on to big gains after the European Central Bank expanded its stimulus more than expected to prop up an economy dealing with its worst recession since World War Two. The ECB increased its emergency bond purchase scheme by 600 billion euros to 1.35 trillion and extended the scheme to mid-2021. The euro’s gains supported appetite for riskier currencies in Asia pushing the U.S. dollar near three-month lows against a basket of currencies. The euro fetched $1.1352 near its peak of $1.1362 in almost three months. The common currency is up 2.4% this week, on track for its third consecutive weekly gain. Investor confidence in the currency has also grown after Germany last month threw its weight behind the idea of a European Union recovery fund, breaking away from its long-held tradition to resist moves towards fiscal integration in the currency bloc. Against the yen, the common currency changed hands at 124.12, having risen to a 13-month high overnight. On the Swiss franc, another safe haven currency, it hit a five-month high on Thursday and last stood at 1.0866.
The U.S. jobs report to come out this afternoon is forecast to show the unemployment rate above 19%, a post-World War Two record. Americans filed nearly 2 million applications for unemployment benefits last week, reflecting a slowing of job losses. The Trump administration expects to spend up to $1 trillion in the next round of stimulus to help with the pandemic effects on the economy. The number of Americans filing for benefits dropped below 2 million last week for the first time since mid-March but is still three times larger than their peak during the global financial crisis. Official U.S. employment data due later is expected to show nonfarm payrolls fell by 8 million in May after a record 20.537 million plunge in April.
Asian stocks extended gains and were poised for their biggest weekly rise since 2011. Chinese shares turned positive as did Hong Kong's Hang Seng index. In a sign the positive mood was likely to spread elsewhere, E-mini futures for the S&P 500 jumped 0.8% to reach a three-month peak. Eurostoxx 50 added 1.2% in line with Germany’s Dax which gained 1.25%. European equities are now outperforming their U.S. peers in the latest leg of the rebound, boosted by bets of a swift recovery and a string of stimulus plans and yesterday’s European Central Bank measures. UK stocks and were set for their third straight week of gains as optimism around a post-coronavirus economic recovery drove investors back to riskier assets. The blue-chip FTSE 100 was up almost 1%, with travel stocks surging on a report saying here some European countries were keen to adopt "transport corridors", which would let British holidaymakers visit Mediterranean resorts without quarantining for 14 days on their return.
The Hong Kong dollar rose against the U.S. dollar for the first time since May 21, prompting the Hong Kong Monetary Authority to intervene in the market. The gains came even amid rising worries about the future of the city after China’s move last month to impose national security legislation. Hong Kong police on Thursday pepper-sprayed some protesters who defied a ban to stage candlelight rallies in memory of China’s 1989 Tiananmen Square democracy crackdown. The US dollar is trading at 109.35 against the yen, a two-month high of 109.235. Unwinding bets on safe-haven currencies reflected broad optimism in financial markets as easing social distancing restrictions supported economic recovery hopes. The Australian dollar, often seen as a risk proxy in the currency market, remained just above $0.7, a five-month high. Spot gold inched down to $1,709.4 an ounce.