The dollar is trading modestly higher against all of its major rivals Thursday afternoon, adding to its recent gains. The Federal Reserve raised interest rates Wednesday afternoon for the first time since 2006. The decision was widely expected and has eliminated some uncertainty in the markets.
Acknowledging improvement in the jobs market and rising inflation, the Federal Open Market Committee decided to raise the target range for the federal funds rate from 0 percent to 0.25 percent to 0.25 percent to 0.5 percent.
Looking further out, the Fed sees only “gradual” rate hikes in 2016, according to its so-called “dot plot.” From there, FOMC members expect even slower rate hikes in 2017-2018.
The vote to raise rates was unanimous, with Federal Reserve Bank of Richmond President Jeffrey Lacker going along with his colleagues after dissenting in September and October.
After reporting first-time claims for U.S. unemployment benefits at a five-month high in the previous week, the Labor Department released a report on Thursday showing a pullback in initial jobless claims in the week ended December 12th.
The report said initial jobless claims fell to 271,000, a decrease of 11,000 from the previous week’s unrevised level of 282,000. Economists had expected jobless claims to pull back to 275,000.
After reporting a slight improvement in regional manufacturing conditions in the previous month, the Federal Reserve Bank of Philadelphia released a report on Thursday showing that regional manufacturing activity unexpectedly contracted in December.
The Philly Fed said its diffusion index for current activity fell to a negative 5.9 in December from a positive 1.9 in November, with a negative reading indicating a contraction. Economists had expected the index to edge down to a positive 1.2.
With building permits, the interest rate spread, and stock prices driving the improvement, the Conference Board released a report on Thursday showing its leading U.S. economic indicators index rose by more than expected in November.
The Conference Board said its leading economic index climbed by 0.4 percent in November following a 0.6 percent increase in October. Economists had expected the index to edge up by 0.2 percent.
The dollar has extended its winning streak against the Euro to a third session Thursday, rising to a 2-week high of $1.0810, from around $1.1060 on Tuesday.
German business confidence declined in December, reports said Thursday, citing results of a survey by the Ifo Institute. The business climate index fell to 108.7 in December from 109 in November. It was forecast to remain unchanged at 109.
Eurozone’s labor costs growth slowed for the second consecutive quarter in the three months ended September, figures from Eurostat showed Thursday. Hourly labor costs rose at a slower pace of 1.1 percent year-over-year in the third quarter, following a 1.6 percent hike in the preceding quarter. In the first quarter of this year, the rate of growth was 1.9 percent.
Eurozone construction output increased in October after falling in the previous month, figures from Eurostat showed Thursday. Construction output climbed a seasonally adjusted 0.5 percent month-over-month in October, reversing a 0.7 percent decrease in September, which was revised from a 0.4 percent drop. In August, output had risen the same 0.5 percent.
The buck has extended its gains against the pound sterling to a 4 straight session Thursday, climbing to an 8-month high of $1.4885, from around $1.52 at the start of the trading week.
U.K. retail sales recovered at a faster than expected pace in November, official data revealed Thursday. Retail sales expanded 1.7 percent in November from October, when it fell 0.5 percent, the Office for National Statistics said. Economists had forecast a 0.6 percent rise for November.
The greenback has also been gaining ground against the Japanese Yen since the beginning of the week, rising around Y122.830 from around Y120.500 on Monday.
Japan’s merchandise trade deficit narrowed more-than-expected in November from a year ago, as imports fell faster than exports, the Ministry of Finance said on Thursday. The trade deficit decreased notably to JPY 379.7 billion in November from JPY 898.8 billion in the corresponding month last year. Economists had expected the deficit to narrow to JPY 449.7 billion.
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