Euro Retracts Sharply After Late Selloff In U.S. Stocks

Although euro rose to an intra-day high of 1.5142 on Thursday after ECB President Trichet's comment, the single currency then retreated sharply from there after failing to penetrate its 16-month high of 1.5145. The decline accelerated in late New York afternoon on the selloff in equities minutes before markets closed. Earlier, a report showed that U.S. ISM non-manufacturing index shrank unexpectedly to 48.7 in November compared to economists' forecast of 51.3.

The ECB left its main refinancing rate at a record low of 1% and announced that it will conduct the last of its 12-month refinancing operations this month as its starts winding down liquidity injections for banks. Comments from European Central Bank suggested emergency stimulus lending will be withdrawn gradually. ECB's President Trichet said that monetary analysis signaled low inflation pressure over the medium term and latest information still suggested improvement in economic activity for the rest of the year and recovery will continue at gradual pace in 2010, however, he indicated that uncertainty remains high.

Data to be released on Friday include Switzerland combined PPI, Canada unemployment rate and Ivey PMI, as well as the closely-watched U.S. non-farm payrolls and unemployment rate.