The dollar is losing ground against the Euro Thursday, but is little changed in comparison to the pound sterling and the Japanese Yen. Investors have been playing it cautious at the end of this holiday shortened trading week. The U.S. jobs report for March will be released tomorrow, but equity markets will be closed for the Good Friday holiday.
First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended March 28th, according to a report released by the Labor Department on Thursday, with claims falling to their lowest level in two months.
The report said initial jobless claims dropped to 268,000, a decrease of 20,000 from the previous week’s revised level of 288,000. The drop surprised economists, who had expected jobless claims to edge up to 285,000 from the 282,000 originally reported for the previous week.
With the value of imports showing another substantial decrease, the Commerce Department released a report on Thursday showing that the U.S. trade deficit narrowed by much more than anticipated in the month of February.
The Commerce Department said the trade deficit narrowed to $35.4 billion in February from a revised $42.7 billion in January. Economist had expected the deficit to narrow slightly to $41.5 billion from the $41.8 billion originally reported for the previous month.
With a jump in orders for non-durable goods more than offsetting a drop in orders for durable goods, the Commerce Department released a report on Thursday showing an unexpected increase in new orders for U.S. manufactured goods in the month of February.
The report said factory orders edged up by 0.2 percent in February following a revised 0.7 percent decrease in January. Economists had expected orders to fall by 0.4 percent compared to the 0.2 percent drop previously reported for the previous month.
Policymakers agreed that the stimulus measures adopted since the middle of last year were warranted and were adequate to reach the price stability objectives, and their full implementation was essential to retain the favorable market sentiment, the minutes of the latest European Central Bank Governing Council meeting showed Thursday.
“It was essential for the Governing Council to remain firm, implementing the measures adopted without hesitation until the objectives were reached, in line with its commitment to keep this policy in place for as long as needed,” the minutes of the March 4-5 meeting, held in Nicosia, Cyprus, revealed.
The ECB left interest rates unchanged for a fifth consecutive session on March 5 and decided to commence bond purchases under an historic $1.1 trillion quantitative easing plan on March 9.
“Overall, the sentiment was widely shared that with the January 2015 monetary policy decisions the Governing Council had added a sizeable further stimulus and had now deployed almost the full range of the instruments at the disposal of monetary policy in support of the economic recovery to deliver on its price stability mandate,” the minutes said.
Members agreed that the policy measures adopted since June 2014 were warranted and “fully adequate to gradually reach the intended objectives over time”, the minutes said. They also saw no need to consider any new policy measures at this stage or reconsider any of the parameters of the plan to purchase state debt as decided on January 22.
The dollar began Thursday’s session around the $1.0750 level, but has dropped to a 3-day low of $1.0892 in the afternoon.
The buck rose to an early high of $1.4775 against the pound sterling Thursday, but has pulled back to around $1.4840 in the afternoon, nearly unchanged for the session.
The U.K construction sector expanded at a slower-than-expected pace in March, largely due to weaker growth of output and new orders, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed Thursday.
Nonetheless, confidence among companies rose to the highest level in over nine years, helped by improving economic fundamentals and strong order books. The CIPS/Markit construction Purchasing Managers’ Index fell to 57.8 in March from 60.1 in the previous month. It was forecast to drop to 59.8.
Japanese companies’ inflation expectations remained unchanged in March from the prior quarter, a survey from the Bank of Japan showed Thursday.
According to Inflation Outlook of Enterprises, firms expect consumer prices to rise 1.4 percent in one year, the same rate as projected in December.
For next three years, companies forecast 1.6 percent inflation, unchanged from the December survey. In five years, inflation is expected to be at 1.6 percent, slightly below 1.7 percent projected in the prior survey period.
The greenback rose to a high of Y119.897 Thursday, from a low of Y119.452, but has since eased back to around 119.725.
The material has been provided by InstaForex Company – www.instaforex.com