The dollar is extending its recent losses against the Euro on Thursday, but is gaining ground against both the pound sterling and the Japanese Yen. U.S. economic news was mixed this morning, with weekly jobless claims falling by more than anticipated and personal spending and income coming in below expectations.
In an upbeat sign for the labor market, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits pulled back to their lowest level in fifteen years in the week ended April 25th.
The Labor Department said initial jobless claims dropped to 262,000, a decrease of 34,000 from the previous week's revised level of 296,000. Economists had expected jobless claims to edge down to 288,000 from the 295,000 originally reported for the previous week.
While the Commerce Department released a report on Thursday showing a continued increase in U.S. personal spending in the month of March, the report also said personal income was unexpectedly flat.
The report said personal spending rose by 0.4 percent in March following an upwardly revised 0.2 percent increase in February. Economists had expected spending to climb by 0.5 percent compared to the 0.1 percent uptick originally reported for the previous month.
Meanwhile, the Commerce Department said personal income inched up by less than a tenth of a percent in March after increasing by 0.4 percent in February. Income had been expected to rise by 0.2 percent.
Pointing to a positive start to the second quarter, MNI Indicators released a report on Thursday showing a substantial rebound in Chicago-area business activity in the month of April. MNI Indicators said its Chicago business barometer jumped to 52.3 in April from 46.3 in March, with a reading above 50 indicating an expansion. Economists had expected the barometer to climb to 50.0.
With time running short, the Greek government is holding talks with its lenders in Brussels on a reform package. Athens has reportedly signaled that it is willing to sell a majority stake in its two biggest ports. Greece is also said to be willing to compromise on value-added tax rates and some pension reforms. The talks are expected to continue through the weekend. The Greek government hopes to form an interim agreement by next week.
The dollar has been losing ground against the Euro for the past 2 1/2 weeks and dropped to a 2-month low of $1.1248. The U.S. currency is currently trading slightly off that low, around $1.1200.
Eurozone unemployment rate remained unchanged for a second straight month in March, at its lowest level in nearly three years, preliminary data from Eurostat showed Thursday. The seasonally adjusted jobless rate was 11.3 percent, unchanged from both February and January. Economists had forecast a decline in the rate to 11.2 percent.
Eurozone consumer prices remained flat in April as expected by economists after falling for four consecutive months, flash data from Eurostat showed Thursday. Consumer prices dropped 0.1 percent in March and 0.3 percent in February.
Germany's retail sales unexpectedly declined for a second straight month in March, preliminary figures from the statistical office Destatis showed Thursday. Retail sales fell a calendar-and-seasonally adjusted 2.3 percent from February, when they dropped 0.1 percent. Economists had expected a 0.5 percent gain for March. The latest decrease was the biggest in more than a year.
German unemployment declined less than expected in April, the Federal Labor Agency reported Thursday. The number of people out of work declined by seasonally adjusted 8,000 to 2.79 million in April. It was forecast to fall by 15,000.
France's consumer spending declined for the first time in five months in March and at a faster than expected pace, mainly due to a slump in energy consumption, preliminary data from the statistical office INSEE showed Thursday. Household consumption of goods dropped 0.6 percent from February, when they grew 0.2 percent, which was revised up from 0.1 percent. Economists were looking for a 0.5 percent fall.
The buck retested yesterday's low of around $1.5490 against the pound sterling early Thursday, but has since climbed to $1.5325.
The Bank of Japan kept its monetary stimulus unchanged despite lowering inflation and economic growth outlook.
In a statement released Thursday, the BoJ announced that the policy board headed by Governor Haruhiko Kuroda decided by an 8-1 majority vote to maintain the size of quantitative and qualitative easing.
Accordingly, the bank will continue to increase the monetary base at an annual pace of about JPY 80 trillion.
Inflation outlook for the fiscal 2016 was downgraded to 2 percent from 2.2 percent. For fiscal 2017, the bank sees the consumer price index (all items less fresh food) to rise 3.2 percent.
Further, the bank said real growth is set to improve but slightly less than previously projected for FY 2015 and 2016. The economic growth for FY2015 is seen at 2 percent versus the 2.1 percent estimated in January. Likewise, the outlook for FY 2016 was downgraded to 1.5 percent from 1.6 percent.
The greenback broke out to a 1-week high of Y119.879 against the Japanese Yen Thursday, but has since eased back to around Y119.615.
Industrial production in Japan dipped 0.3 percent on month in March, the Ministry of Economy, Trade and Industry said on Thursday, contracting for the second straight month. However, the headline figure beat expectations for a decline of 2.3 percent following the 3.1 percent contraction in February.
Japan housing starts recovered unexpectedly in March, the Ministry of Land, Infrastructure, Transport and Tourism revealed Thursday. Housing starts grew 0.7 percent in March from last year, confounding expectations for a fall of 1.9 percent. In February, housing starts declined 3.1 percent, which was the twelfth consecutive drop.
The number of annualized housing starts increased to 920,000 in March from 905,000 in February. Economists had forecast it to fall to 892,000.
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