The dollar bounced back from early weakness against its major competitors Thursday, following the release of the better than expected weekly jobless claims report.
First-time claims for U.S. unemployment benefits unexpectedly showed a modest decrease in the week ended May 9th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims edged down to 264,000, a decrease of 1,000 from the previous week’s unrevised level of 265,000.
The modest decrease came as a surprise to economists, who had expected initial jobless claims to climb to 275,000. With the slight decrease, jobless claims continue to linger near the fifteen-year low of 262,000 set in the week ended April 25th.
Reflecting a sharp pullback in energy prices, the Labor Department released a report on Thursday showing an unexpected decrease in U.S. producer prices in the month of April. The Labor Department said its producer price index for final demand fell by 0.4 percent in April after edging up by 0.2 percent in March. The index had been expected to show another 0.2 percent increase.
The unexpected drop in producer prices was largely to the steep drop in energy prices, which plunged by 2.9 percent in April after jumping by 1.5 percent in March.
The European Bank for Reconstruction and Development said the monetary policy easing of the European Central Bank has lifted the outlook for economies in central and south eastern Europe. However, prospects further to the east of the transition region have worsened due to the ECB’s quantitative easing.
In the latest Regional Economic Prospects, released Thursday, the EBRD projected overall stagnation in 2015 across all 35 countries covered and a meagre expansion of just 1.4 percent in 2016. Quantitative easing by the ECB, the weaker euro and lower oil costs are also benefiting economies in south-eastern Europe.
However, the deep recession in Russia is having larger-than-expected negative spillover effects on countries with which it has strong economic links.
Greece, the EBRD’s newest recipient country, has been badly hit by fears that the country may default on its external debt obligations and even exit from the Eurozone, it said. Greece is expected to stagnate this year before expanding 2 percent next year.
The dollar sank to nearly a 3-month low of $1.1444 against the Euro early Thursday, but has since bounced back to around $1.1375.
Bank of England Governor Mark Carney said the weak productivity growth was not caused by high levels of immigration.
The argument that foreign workers were to blame should be “dampened down”, Carney told the BBC’s Today programme. Now that spare capacity is being used up, he said it is going to be story of increased productivity.
The buck dropped to a 6-month low of $1.5814 against the pound sterling this morning, but has since rebounded to around $1.5760.
The greenback slipped to a low of Y118.850 against the Japanese Yen Thursday, but has since risen back to around Y119.175, nearly unchanged for the session.
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