US Dollar Higher In Early New York Trading
The US dollar moved well off its early morning multi-day lows against most major currencies on Thursday morning in New York. Traders weighed the latest jobs data and the August non-manufacturing ISM index.
The Labor Department said today that first-time claims for unemployment benefits in the week ended August 29th edged down to 570,000 from the previous week’s revised figure of 574,000. Economists had been expecting jobless claims to slip to 564,000 from the 570,000 originally reported for the previous week.
Meanwhile, a report released by the Institute for Supply Management showed its index of activity in the service sector rose to 48.4 in August from 46.4 in July, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a slightly lower reading of 48.0.
The dollar reversed its course after hitting a 2-day low of 1.0549 against the Swiss franc by 7:45 am ET. The greenback edged higher to 1.0631 against the alpine unit by 10:25 am ET. The dollar-franc pair is presently worth 1.0609 with 1.068 seen as the next target level.
The US dollar that dropped to a 2-day low of 1.4349 against the euro in early trading recouped some of its losses on Thursday morning in New York. The greenback drifted higher to 1.4246 against the buck by 10:25 am ET and the pair is presently quoted at 1.4266. The euro-greenback pair was worth 1.4266 at Wednesday’s close.
Economic recovery in the 16-nation currency bloc is expected to be uneven, given the temporary nature of some of the supporting factors, European Central Bank President Jean-Claude Trichet said today.
In his introductory statement after the ECB left its key interest rate unchanged at a record low of 1% for the fourth month, Trichet said, “The significant contraction in economic activity has come to an end and is now followed by a period of stabilization and very gradual recovery.”
The ECB today raised its economic forecast for this year and next. It now sees 0.2% growth in 2010, a notable revision from a 0.3% contraction predicted in June. This year, the economy is predicted to shrink 4.1%, slower than an earlier prediction of 4.6%.
Also, the Organization for Economic Co-operation and Development revised its growth outlook for Eurozone to show a fall of 3.9% in GDP versus previous estimate of a 4.8% decline.
The ECB also raised its inflation forecasts. The central bank now expects consumer prices to rise 0.4% in 2009 and 1.2% in 2010. That compares with a June prediction of 0.3% for 2009 and 1% for 2010. The ECB targets to keep inflation below, but close to 2% over the medium term.
In economic news, the Eurostat reported that Eurozone retail sales declined 0.2% in July from June, after staying flat in June. The statistical office revised June’s figure from the initial estimate of 0.2% drop. Year-on-year, sales were down 1.8%, smaller than June’s 2% decline. Annual decline for June was revised from a 2.4% fall estimated initially. Economists were looking for a monthly growth of 0.1% and an annual 2.2% fall for July.
French jobless rate surged to its highest level in three years in the second quarter, the statistical office INSEE said today. The jobless rate in metropolitan France and overseas departments stood at 9.5% in the second quarter, up from a revised 8.9% in the previous quarter.
Extending its Asian session’s rally, the greenback advanced to 92.69 against the Japanese yen before leveling off around 10:00 am ET. The dollar-yen pair that closed yesterday’s deals at 92.23 is currently quoted at 92.59.
The greenback gained after hitting a 9-day low of 1.6415 against the pound in early trading on Thursday. The dollar drifted higher to 1.6332 against UK’s sterling by 10:25 am ET and moved in a tight range thereafter. Currently, the cable is quoted at 1.6335 compared to yesterday’s close of 1.6274.
An indicator measuring UK’s services activity expanded for the fourth consecutive month in August, and was also the highest rate since September 2007, the latest survey from Markit Economics and the Chartered Institute of Purchasing & Supply said today.
The seasonally adjusted Business Activity Index stood at a near two-year high of 54.1, remaining well above the threshold level of 50 that separates expansion from contraction. Economists expected the index to come in at 54.
