The dollar has broken out sharply against its major European competition on Thursday, but has weakened in comparison to the Japanese Yen. There have been a number of economic reports released across the globe today, most of which have been disappointing. Japanese retails sales fell more than expected overnight, followed by a decline in Eurozone economic sentiment. German unemployment increased and U.S. weekly jobless claims came in higher than expected.
Investors remained cautious Thursday as they continue to watch for any clues regarding further economic stimulus. The highly anticipated speech by Federal Reserve Chairman Ben Bernanke will take place tomorrow at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyoming. The announcement a few days ago that European Central Bank President would be unable to attend the symposium has led to speculation that the ECB may be preparing some stimulus measures of its own.
Italy had a successful auction on Thursday as it sold its five- and 10-year debt at lower yields as investors remained hopeful that the European Central Bank may resume its bond-buying to help lower the borrowing costs of troubled euro area countries.
The Italian Treasury raised a total EUR 7.29 billion from today's auction, close to the maximum target set for the sale. The latest auction follows two successful sales yesterday and the day before, which raked in proceeds totaling nearly EUR 13 billion.
Today the agency sold EUR 4 billion of the new benchmark bond due November 2022, matching the top end of its target range. The yield on the 10-year debt dropped to 5.82 percent from 5.96 percent paid on July 30 for a security of similar maturity. The country also placed EUR 2.5 billion of its June 2017 bond to yield 4.73 percent, which was far less than the 5.29 percent paid in the previous sale on July 30.
The dollar weakened to around $1.2563 against the Euro Thursday morning, but has since broken out to around $1.2500.
Eurozone economic sentiment deteriorated further in August reflecting the sharp weaknesses in confidence among consumers, retailers and construction managers due to concerns over recession and the lingering sovereign debt crisis.
The economic sentiment index dropped to 86.1 from 87.9 in July, European Commission's monthly survey revealed Thursday. The reading was the lowest since late 2009 and below the expected level of 87.5.
German unemployment increased for the fifth month in August as firms shed jobs fearing a recession in the 17-nation currency bloc. The Federal Labor Agency on Thursday said the number of unemployed increased by adjusted 9,000 from July to 2.9 million. It was forecast to increase by 7,000, following July's monthly rise of 9,000.
However, the jobless rate remained unchanged at a seasonally adjusted 6.8 percent in August as economists expected.
The greenback hit a one-week low of $1.5874 against the pound sterling early Thursday, but has since climbed back to around $1.5780.
The buck has pulled back from yesterday's high of Y78.779 versus the Japanese Yen, to around Y78.555 Thursday.
Retail sales in Japan were down a seasonally adjusted 1.5 percent in July, the Ministry of Economy, Trade and Industry said on Thursday, worth 11.70 trillion yen. That missed forecasts for a fall of 0.5 percent following the 1.2 percent contraction in June.
Initial claims for U.S. unemployment benefits unexpectedly came in unchanged in the week ended August 25th, according to a report released by the Labor Department on Thursday.
The report showed that initial jobless claims came in at 374,000, unchanged compared to the previous week's revised figure. Economists had expected jobless claims to edge down to 370,000 from the 372,000 originally reported for the previous week.
Personal income and spending in the U.S. both increased in the month of July, according to a report released by the Commerce Department on Thursday, with the increases both coming in line with economist estimates.
The report showed that personal income rose by 0.3 percent in July, matching the increases seen in the two previous months. The increase also came in line with estimates. The Commerce Department also said personal spending increased by 0.4 percent in July after coming in roughly flat in June. The spending growth also matched the expectations of economists.
by RTT Staff Writer
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