The dollar has gained ground against its major European competitors on Thursday. Investors were disappointed after the highly anticipated announcement from the European Central Bank. ECB President Mario Draghi failed to identify any specific measures that would be employed to combat the Eurozone's debt crisis.
The European Central Bank on Thursday decided to retain its interest rate at a record low amid the bloc going through an unresolved debt crisis and economic downturn. At the meeting in Frankfurt, the central bank to the 17 nation currency bloc left its benchmark interest rate unchanged at 0.75 percent. The decision was in line with economists' expectations.
Draghi pledged last Thursday that "Within our mandate, the ECB is ready to do whatever it takes to defend the euro". And that will be enough, he added. Germany, France and Italy have also voiced their support to protect the euro.
At a press conference explaining the European Central Bank's decision to hold steady on interest rates, ECB President Mario Draghi assured that policy makers "will consider undertaking further non-standard measures" if conditions deteriorate.
The European Central Bank may craft plans in the coming weeks to make outright purchases of bonds, Draghi said, while warning the ECB cannot act alone to drive down borrowing costs.
Standard & Poor's maintained Germany's top notch 'AAA' credit ratings with a 'stable' outlook as the economy is considered strong enough to withstand any large economic and financial shocks. The agency affirmed the unsolicited 'AAA' long-term and 'A-1+' short-term ratings for Germany, S&P said in a statement on Thursday.
The Federal Reserve on Wednesday offered a sobering assessment of the U.S economy but refrained from any new stimulus measures in their latest decision on monetary policy.
In a sign that policy makers are concerned with the pace of the recovery, Federal Open Market Committee member repeated their promise to keep interest rates at zero until late 2014.
The dollar weakened to around $1.2400 versus the Euro Thursday morning, but has since broken out to a one-week high of $1.2133.
Eurozone industrial producer prices fell 0.5 percent month-on-month in June, the same rate of decline as seen in the prior month, Eurostat reported Thursday. The rate was marginally bigger than the expected decrease of 0.4 percent.
The Bank of England kept its policy unchanged on Thursday despite the economy slipping deeper into recession. Apparently, the no action reflects a wait-and-watch approach, until the stimulus measures initiated last month feed through and take effect.
The nine-member Monetary Policy Committee maintained the asset purchase programme at GBP 375 billion and the key interest rate at a historic low of 0.50 percent.
The greenback has added to its previous 2 days of gains in comparison to the pound sterling on Thursday and has reached a one-week high of $1.5490.
The U.K. construction sector logged a bigger than expected growth in July, driven by an increase in commercial output, data from Markit Economics showed Thursday. The Chartered Institute of Purchasing & Supply/Markit Purchasing Managers' Index rose to 50.9 in July from 48.2 in June. The reading was forecast to rise to 48.7.
Japanese banks' large holdings of government debt and slow economic growth are challenging the profitability and functioning of the financial system, the International Monetary Fund said Thursday.
In its latest assessment of Japan's financial system, the IMF said deep rooted factors that pose risks to financial stability should be addressed. Deflation and country's aging population are some of the major issues.
The buck has pulled back from Wednesday's high of Y78.531 versus the Japanese Yen on Thursday, to around Y78.240.
While the Labor Department released a report Thursday morning showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended July 28th, claims rose by less than economists had been anticipating.
The report showed that initial jobless claims crept up to 365,000 from the previous week's revised figure of 357,000. Economists had expected jobless claims to climb to 370,000 from the 353,000 originally reported for the previous week.
Despite continued strength in the transportation sector, new U.S. factory orders showed an unexpected drop in June, reversing a smaller than previously reported increase in May. According to figures released Thursday by the Commerce Department, new orders for manufactured goods decreased by $2.1 billion or 0.5 percent in June.
The drop in factory orders came as a surprise to economists, who had been expecting orders to increase by about 0.7 percent.
by RTT Staff Writer
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