The dollar has given back some of its early gains against its major competitors on Thursday, after the release of the weekly jobless claims report. Jobless claims showed only a modest drop and came in above the level estimated by economists. The trading session was full of weaker than expected economic data from around the world, beginning with the manufacturing data reported by China overnight.
While the Labor Department released a report on Thursday showing a modest drop in first-time claims for U.S. unemployment benefits in the week ended September 15th, jobless claims still came in above economist estimates.
The report showed that jobless claims edged down to 382,000 from the previous week's revised figure of 385,000. Economists had expected jobless claims to drop to 373,000 from the 382,000 originally reported for the previous week.
The European Central Bank's new government bond purchase program may last only for a few years, ECB Governing Council member Christian Noyer told Frankfurter Allgemeine Zeitung in an interview published Thursday.
Noyer, who heads the Bank of France, said he hoped that the impact of the program would be felt very quickly. "I would be surprised if such a program" is in place for several years, he told the magazine.
The European Union's Internal Market Commissioner Michel Barnier reportedly said on Thursday that he will work to find a compromise with Germany on the proposal for a banking union.
Banks' shareholders must be ready to take on more risk in banking operations without burdening the government and the tax payers, European Central Bank Governing Council member Erkki Liikanen said in an interview to newspaper Demokraatti.
It is the task of the shareholders and investors to ensure that the banks operate in such a way as to avoid losses, Liikanen, who heads the Bank of Finland, said.
Spain conducted a successful bond auction on Thursday, with borrowing costs falling amid hopes the country will request aid paving the way for the European Central Bank to purchase sovereign debt.
In the first bond auction held by Spain after the European Central Bank announced its new bond purchase plan earlier this month, the treasury raised EUR 4.8 billion from the sale of its benchmark 10-year bond and a new 3-year bond. The target set for the sale was between EUR 3.5 billion and EUR 4.5 billion.
The yield on the January 2022 bond dropped to 5.666 percent from 6.647 percent paid in the previous sale on August 2.
The dollar climbed to nearly a one-week high of $1.2918 versus the Euro Thursday, but has since eased back to around $1.2970.
Eurozone private sector activity fell to a 39-month low in September, a survey showed, and the deterioration witnessed over the last few months signal that the single currency region is clearly heading into a severe recession.
The composite output index, which measures activity in the manufacturing sector and the service sector, fell unexpectedly to 45.9 from 46.3 in August, preliminary data released by Markit Economics showed Thursday.
Eurozone consumer confidence unexpectedly declined in September, down for the fourth straight month, preliminary data from the European Commission showed Thursday. The consumer confidence indicator for the 17-nation economy slid to -25.9 from -24.6 in August. Economists had expected the index to climb to -24.
Activity in Eurozone's manufacturing sector decreased at a slower pace in September, data released by Markit Economics showed Thursday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector rose to a six-month high of 46 in September from 45.1 in August, but remained below the no-change 50 mark that separates growth from contraction. Economists expected to index to rise to 45.5.
Germany's manufacturing sector contracted further in September, though at a slower rate, data from a survey by Markit Economics showed Thursday. The seasonally adjusted purchasing managers index (PMI) for the manufacturing sector rose to 47.3 in September from 44.7 in August, and hit the highest level in six months.
Germany's producer price inflation accelerated more than economists expected in August, data released by statistical office Destatis showed Thursday. The producer price index increased 1.6 percent on an annual basis in August, notably faster than the 0.9 percent gain seen in July. Economists were looking for a 1.5 percent growth.
The French private sector shrank at the fastest pace since April 2009 driven by a marked decline in incoming new business, survey data from Markit Economics showed Thursday. The flash composite output index fell to 44.1 in September from 48 in August.
The buck reached a 4-session high of $1.6162 versus the pound sterling Thursday, but has since pulled back to around $1.6215.
U.K. retail sales, including auto fuel, fell 0.2 percent month-on-month in August, data from the Office for National Statistics showed Thursday. Economists had forecast a 0.3 percent drop following a 0.3 percent rise in July.
The Bank of Japan on Thursday reiterated that the economy's recovery from last year's earthquake has reached a pause, while overseas economies have "moved deeper into a deceleration phase." Exports and industrial production have been relatively weak, while domestic demand has been resilient, the central bank said in its monthly report.
The central bank expects Japan's economy "to level off more or less for the time being" and thereafter return to a moderate recovery path supported by domestic demand and recovery in overseas economies.
The greenback has remained relatively flat in comparison to the Japanese Yen on Thursday, hovering around the Y78.250 level.
Japan posted a merchandise trade deficit of 754.127 billion yen in August, the Ministry of Finance said on Thursday - sinking into the red for the ninth time in 11 months. The headline figure beat forecasts for a shortfall of 829.3 billion yen following the downwardly revised deficit of 518.9 billion yen in July (originally 517.382 billion yen).
Japanese all industry activity fell more than expected in July, reflecting declines in construction and industrial output, the Ministry of Economy, Trade and Industry showed Thursday. All industry activity dropped 0.6 percent month-on-month, reversing the 0.3 percent increase seen in June. The rate of decrease slightly exceeded the 0.5 percent fall forecast by economists.
Manufacturing firms in the mid-Atlantic region reported nearly flat business activity in September, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector rising much more than expected.
The Philly Fed said its diffusion index of current activity rose to a negative 1.9 in September from a negative 7.1 in August. While a negative reading still indicates a contraction in regional manufacturing activity, economists had expected the index to show a more modest increase to a negative 4.0.
After reporting a notable increase by U.S. leading economic indicators in the month of July, the Conference Board released a report on Thursday showing an unexpected decrease by its leading indicators index in the month of August.
The Conference Board said its leading economic index edged down by 0.1 percent in August following a revised 0.5 percent increase in July. The drop surprised economists, who had expected the index to come in flat compared to the 0.4 percent increase originally reported for the previous month.
by RTT Staff Writer
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