US dollar jumped on Wednesday versus its major rivals in reaction to disappointing Spanish bond auction while ECB’s President, Mario Draghi said that central bank is nothing thinking to quit its accommodative monetary policy.

Draghi commented that rising inflation in euro zone is major risk for the region’s growth and bank’s non-standard measures which includes liquidity measures. Further to add, sharp increase in yields of Spanish and Italian bonds created more uncertainty among investors.

The euro declined to 1.3139 against the US dollar on Wednesday as compared to 1.3231 on Tuesday’s late trading hours.

The ICE dollar index DXY which tracks the greenback’s movement versus its six major rival currencies surged to 79.764 on Wednesday as compared to 79.410 in Tuesday’s North American trading session.

Among other currencies, the British Pound fell to 1.5890 against the US dollar as compared to 1.5901 on late Tuesday. The Pound Sterling remained lower in reaction to the comments of the British Chambers of Commerce report according to which more support is needed for UK’s private sector.

The US dollar however remained lower versus the Japanese yen in reaction to bearish stock markets around the globe. The greenback fell to 82.49 against the Japanese yen on Wednesday as compared to 82.87 on late Tuesday.

The Australian dollar fell to 1.0256 against the US dollar on Wednesday as compared o 1.0309 on late Tuesday.

Major events that have a significant impact on the trading of the pair GBP/USD for the week ending January 13^th, 2012 are as follows:

On Monday, In United States, member of Federal Open Market Committee, Dennis Lockhart addressed at a public event.

On Tuesday, January 10^th, 2012, British Retail Consortium will publish its report on UK’s retail sales. The country will also report industry data on house price balance while in United States, FOMC member John Williams and Sandra Pianalto will address at an event.

On Wednesday, January 11^th, government data on crude oil stockpiles will be released in United States while US Federal Reserve will publish its Beige Book. Moreover, FOMC member Dennis Lockhart will also address at an event. In United Kingdom, official data on country’s trade balance will be reported.

On Thursday, January 12^th, 2012, government report on manufacturing production in United Kingdom will be released. Moreover, the National Institute of Economic and Social Research will report its monthly expected figure for GDP while Bank of England will release its benchmark interest rate.

In United States, government data on retail sales and initial jobless claims will be reported. Moreover, official data on business inventories, future business spending and report on federal budget balance will also be released in US.

On Friday, January 13^th, several indicators will be released in United States which will include data on country’s trade balance, University of Michigan’s data on inflation expectations and consumer sentiment. In United Kingdom, official data on producer price input will be reported.

The US dollar recovered on Wednesday in reaction to weaker single currency. Uncertainty in euro zone arose due to the region’s debt crisis. According to a Spanish Newspaper, Spain’s government is planning to apply for loans to restructure the country’s banking sector from International Monetary Fund and European Union. The news seemed authentic as the earlier this week Spanish government also gave the projection for 2011 deficit which could increase to 8 percent of the country’s GDP. Yields on 10-year Spanish bond also gained 14 basis points to 5.37 percent further weakening the single currency.

Strategist Geoffrey Yu from UBS commented, “With sovereigns gradually returning to the market to issue, the true tests will begin for the euro zone and so far they haven’t exactly been passed with flying colors.”

The euro fell to 1.2939 versus the US dollar on Wednesday as compared to 1.3064 on Tuesday’s North American trading session.

The dollar index DXY which measures the greenback’s performance against its six major counterparts gained to 80.119 on Wednesday as compared to 79.591 on Tuesday’s late trading hours.

Among other currencies, Hungarian unit took heavy beating and fell to its record low since the launch of the shared currency. The Hungarian Forint fell in reaction to the latest law passed by country’s parliament which is considered hindrance for independence of the central bank. The Forint traded at 320 against 1 euro.

The British Pound declined to 1.5612 against the US dollar on Wednesday as compared to 1.5657 on Late Tuesday. Against the Japanese yen, the US dollar gained to 76.73 as compared to 79.68 on Tuesday.

US dollar fell on Thursday as the US stock markets rallied in reaction to better than expected US economic data. This reduced the appeal of the US dollar as a safe haven and investors shifted their focus towards the equities. US pending home sales improved in December as compared to November while manufacturing activity in Chicago also boosted surprising everyone. However on negative side the US jobless claims increased to 381,000 in current week.

Economists at RDQ Economics commented, “The evidence continues to grow that economic growth is on an upswing as 2011 draws to a close.”

In reaction to weaker greenback the single currency also found support and recovered from its lowest in 11 years. The euro gained to 1.2949 versus the US dollar on Thursday as compared to 1.2938 in Wednesday’s North American trading session. The euro fell versus the Japanese Yen to 100.54 on Thursday as compared to 100.83 on Wednesday. The single currency has fell 3.3 percent versus the greenback in the current year while is down 7.4 percent against the Japanese Yen.

The dollar index DXY which measures the greenback’s performance against its six major counterparts fell to 80.425 on Thursday as compared to 80.526 on Wednesday’s North American trading session. The dollar index has appreciated 1.8 percent in the current year.

Among other currencies, the British Pound declined to 1.5412 versus the US dollar as compared to 1.5455 on late Wednesday. The Pound Sterling has declined by 1.3 percent in the current year.

Against the Japanese yen, the greenback fell to 77.63 on Thursday as compared to 77.95 on Wednesday.

The US dollar fell on Tuesday as stock market moved in upward direction. Investors were optimistic despite low trading volumes after the stronger US consumer confidence data. As per the latest data of US Conference Board, consumer confidence index gained 64.5 in the current months as compared to 55.2 for the month of November. Stock markets remained positive in reaction to better economic data which resulted in weaker greenback as the US dollar maintains a negative correlation with US stock markets.

Chief global strategist, Dan Greenhaus from BTIG commented, “We can add this indicator to the list of items pointing to a ‘better’ labor market as 2011 ends and 2012 begins.”

The single currency gained to 1.3074 versus the greenback on Tuesday as compared to 1.3059 on Monday’s Asian trading session. The dollar index DXY which tracks the greenback’s movement against its six major counterparts fell 0.3 percent to 79.792. The index has gained 1.8 percent in the current month while euro is down 2.8 percent against the greenback for the month of December.

Among other currencies, the British Pound gained to 1.5663 against the US dollar as compared to 1.5612 on Monday. The US markets remained closed on Tuesday while the Pound Sterling has fell 0.2 percent in the current month.

Against the Japanese yen, the US dollar fell to 77.85 on Tuesday as compared to 77.99 on Monday. For the month, the US dollar has gained 0.4 percent versus the yen. The Australian dollar fell to 1.0161 on Tuesday as compared to 1.0159 on Monday’s Asian trading hours.

The US dollar gained on Wednesday in reaction to the news that Germany has decided not to participate in the latest proposed program for enhancement of euro zone’s financial ability. The single currency was rallying in earlier session in reaction to the move of major central banks to cut borrowing costs but hasn’t been able to sustain it.

Initially the investors were optimistic about the shared currency as the talks to combine euro zone’s bailout fund of 440 billion euro equivalent to USD 593.1 billion were in process. The European official also talked to combine the permanent European Stability Mechanism of 500 billion euro. However later in the session the euro turned down on the news that a German official opposed the move of combining the funds.

Global currency and policy strategist, Andrew Busch from BMO Capital Markets commented, “Germany appears to be downplaying expectations for the summit, the news flow from Europe suggests more struggles for a fiscal union agreement.”

The euro fell to 1.3405 against the US dollar on Wednesday as compared to 1.3416 on Tuesday’s late trading hours.

The dollar index DXY which measures the US dollar’s performance against its six major rival currencies also fell to 78.470 on Wednesday as compared to 78.498 on Tuesday’s North American trading session. The appreciation of British Pound contributed the most to the fall of the dollar index as the Pound Sterling gained 1.5701 versus the greenback on Wednesday as compared to 1.5609 on late Tuesday.

Against the Japanese yen, the US dollar fell to 77.68 on Wednesday as compared to 77.75 on Tuesday’s late trading hours.