The dollar is pulling back against its major European rivals Thursday afternoon, but it holding onto modest gains against the Japanese Yen. A pair of weaker than expected economic reports is largely to blame for the weakness in the U.S. currency.
Partly reflecting a sharp drop in aircraft demand, the Commerce Department released a report on Thursday showing a substantial decrease in new orders for U.S. manufactured durable goods in the month of December.
The Commerce Department said durable goods orders plunged by 5.1 percent in December compared to the 0.6 percent drop expected by economists. The flat reading originally reported for November was also revised to a 0.5 percent decrease.
After reporting first-time claims for U.S. unemployment benefits at a six-month high in the previous week, the Labor Department released a report on Thursday showing a bigger than expected pullback in initial jobless claims in the week ended January 23rd.
The report said initial jobless claims fell to 278,000, a decrease of 16,000 from the previous week’s revised level of 294,000. Economists had expected jobless claims to pull back to 285,000 from the 293,000 originally reported for the previous week.
Pending home sales in the U.S. inched slightly higher in the month of December, the National Association of Realtors revealed in a report on Thursday. NAR said its pending home sales inched up 0.1 percent to 106.8 in December from a downwardly revised 106.7 in November. Economists had expected the index to climb by 0.8 percent.
The Federal Reserve made no change to monetary policy yesterday, a month after raising interest rates for the first time in nearly a decade.
In keeping the benchmark interest rate near 0.25 percent, the Federal Open Market Committee acknowledged economic weakness overseas, particularly China, is a threat to the U.S. recovery.
“Economic growth slowed” since its last meeting in December, and inflation remains stubbornly low, but there was no specific mention of heavy recent losses on Wall Street. The Fed did not completely rule out a rate hike at its next meeting in March.
The dollar has fallen to a 1-week low of $1.0965 against the Euro Thursday afternoon, from an early high of $1.0869.
Eurozone economic confidence deteriorated more-than-expected to a five-month low in January as the stock market turmoil and slowdown in China weighed on sentiment across all sub-sectors. The economic confidence index dropped to 105 in January from a revised 106.7 in December, survey results from European Commission showed Thursday.
The reading was forecast to fall marginally to 106.4. This was the lowest score since August, when the reading was 104.
Germany’s consumer prices rose at the fastest pace in eight months during January, exceeding economists’ expectations, preliminary data from Destatis showed Thursday. The consumer price index climbed 0.5 percent year-on-year following 0.3 percent increase in December. Economists had forecast 0.4 percent rise.
Germany’s imports prices declined at the weakest pace in four months during December, figures from Destatis showed Thursday. The import price index fell 3.1 percent year-on-year following a 3.5 percent slump in November. Economists had forecast a 3 percent decline.
Export prices, meanwhile, rose 0.2 percent year-on-year in December after a 0.3 percent increase in the previous month.
The buck has fallen to nearly a 2-week low of $1.4380 against the pound sterling, from around $1.4250 this morning.
The U.K. economy grew at a slightly faster pace in the fourth quarter of 2015, relying entirely on the service sector. The overall growth remained lackluster, trending below quarterly rates of 2014, and annual growth was the weakest in nearly three years.
Gross domestic product climbed 0.5 percent sequentially in the fourth quarter last year, slightly faster than the 0.4 percent expansion posted in the previous three months, preliminary estimate from the Office for National Statistics showed Thursday. The growth rate matched economists’ consensus.
UK retail sales volumes declined at the start of the year and orders placed by retailers declined at the fastest pace since May 2013, results of a survey by the Confederation of British Industry showed Thursday.
The monthly Distributive Trends Survey of the CBI gave a sales balance of +16, which was lower than the +19 in December. Economists had forecast a balance of 18.
Japan’s Economy and Fiscal Policy Minister Akira Amari announced his resignation over graft allegations, in what is the most high profile loss for Prime Minister Shinzo Abe’s Cabinet thus far and could derail his “Abenomics” program to boost the economy.
A close ally of Abe, Amari, decided to step down after it was revealed that he and his aides received cash from a construction company. The minister announced his resignation at a news conference on Thursday after rejecting allegations for a week.
The government named Nobuteru Ishihara as the new Economy Minister.
The greenback is trading around Y118.725 against the Japanese Yen this afternoon, slightly off its high of Y118.991.
The material has been provided by InstaForex Company – www.instaforex.com