The dollar is little changed in comparison to its major rivals on Thursday, which seems puzzling, due to the number of weaker than expected economic reports from Europe on Thursday. The U.S. reports, while positive, also came in below expectations and China's manufacturing sector shrank for a seventh straight month in May. The U.S. currency is holding on to its recent gains versus its European competitors, but has traded essentially flat today.
European leaders have voiced their strong desire for Greece to remain in the eurozone and honor its commitments under previously agreed bailout deals that require the implementation of reforms and unpopular austerity measures,
European Council President Herman Van Rompuy said during a press conference held after an informal summit of European leaders in Brussels on Wednesday.
Rompuy also expressed hopes that the new Greek government that emerges from next month's general elections would choose to implement the reforms and austerity measures needed to bring the crisis-hit nation back on the road to progress.
German Chancellor Angela Merkel reinforced her opposition to the idea of issuing eurobonds at Wednesday's informal European Union summit. Merkel added that eurobonds will violate the EU treaty and would not help to kick-start growth. Meanwhile, new French President Francois Hollande insisted that the option should be actively considered.
The buck has been gaining ground versus the Euro since the beginning of May and briefly touched $1.2515 on Thursday, its highest level since July 4, 2010. The currency has hovered around $1.2575 for the majority of the session.
Eurozone private sector activity downturn worsened to a three-year low in May after the economy narrowly escaped a recession in the first quarter, preliminary data from Markit Economics revealed Thursday. The growth-engine of the 17-nation bloc Germany also returned to a negative zone. Intensifying the downturn, France's private sector shrank at the fastest since April 2009. In the rest of the Eurozone, the pace of contraction remained severe. The flash composite output index dropped more than expected to 45.9 from 46.7 in April.
Final data from the Federal Statistical Office on Thursday confirmed that the German economy has staged an impressive comeback in terms of economic growth in the first quarter of 2012, supported by exports and private consumption. As estimated earlier, the gross domestic product rose a seasonally adjusted 0.5 percent quarter-on-quarter, recovering from a 0.2 percent decline in the fourth quarter.
Activity in the German manufacturing sector decreased at a faster rate in May, data from a survey by Markit Economics and BME showed Thursday. The seasonally adjusted purchasing managers' index for the manufacturing sector dropped to 45 in May from 46.2 in April. Economists were looking for a reading of 47 in May.
Confidence among German businesses fell more than expected in May to the lowest level in six months, as talks about a possible Greek exit from Eurozone weighed on firms' optimism, a key survey revealed Thursday. The Ifo Institute said that its business climate index fell to 106.9 in May from 109.9 in April. This was the first drop in the index since October last year. Economists had forecast a more modest drop to 109.4.
The greenback has also continued to gain ground in comparison to the pound sterling on Thursday, briefly touching a 2-month high of $1.5637. The currency has hovered around $1.5680 for the majority of the session.
The U.K. economy fell into a double-dip recession at a faster than estimated pace during the first quarter due to a sharp revision to construction. Gross domestic product shrank 0.3 percent from a quarter ago, slightly bigger than the previously estimated drop of 0.2 percent, second estimates published by the Office for National Statistics revealed Thursday.
The dollar has bounced back from Wednesday's low of Y79.204 versus the Japanese Yen, back to around Y79.500.
Initial claims for U.S. unemployment insurance dipped in the week ended May 19th after revised figures showed a higher number of claims in the previous week. According to the Labor Department, new unemployment claims came in at a seasonally adjusted level of 370,000, a slight decline from the previous week's revised level of 372,000.
The data for the previous week had initially shown new unemployment claims holding level at 370,000, so the revision reflects a slight increase. Nevertheless, the number for the latest week still comes in below the expectations of most economists, who had predicted a slight increase in claims to 371,000.
After reporting a sharp drop in durable goods orders in the month of March, the Commerce Department released a report on Thursday showing a modest increase in durable goods orders in April. The report showed that durable goods orders edged up by 0.2 percent in April after tumbling by 3.7 percent in March. The steep drop reported for March reflected a revision from the 4.2 percent decrease that had been reported previously.
by RTT Staff Writer
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