The dollar has retreated on Thursday, following the release of several weaker than expected economic reports. Among the disappointing results was the downward revision to second quarter GDP and a larger than expected decrease in new orders for durable goods. The lone bright spot was the bigger than anticipated drop in initial jobless claims.
In a positive sign for the sluggish labor market, the Labor Department released a report Thursday morning showing a much bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 22nd.
The report showed that jobless claims fell to 359,000 from the previous week's revised figure of 385,000. Economists had expected jobless claims to drop to 376,000 from the 382,000 originally reported for the previous week.
With private inventory investment, consumer spending, and exports all rising by less than previously estimated, the Commerce Department released a report on Thursday showing that the U.S. economy expanded by less than previously reported in the second quarter.
The report showed that U.S. gross domestic product increased at an annual rate of 1.3 percent in the second quarter compared to the previous estimate of 1.7 percent growth. The downward revision came as a surprise to most economists, who had expected the rate of second quarter GDP growth to be unrevised.
New orders for U.S. manufactured durable goods showed a substantial decrease in the month of August, according to a report released by the Commerce Department on Thursday, with the steep drop largely due to a sharp decline in orders for transportation equipment.
The Commerce Department said durable goods orders fell by 13.2 percent in August following a revised 3.3 percent increase in July. Economists had been expecting durable goods orders to drop by a more modest 5.0 percent.
After jumping to a two-year high in the previous month, pending home sales in the U.S. unexpectedly saw a notable pullback in the month of August, according to a report released by the National Association of Realtors on Thursday.
NAR said its pending home sales index fell by 2.6 percent to 99.2 in August after rising by 2.6 percent to 101.9 in July. The drop came as a surprise to economists, who had expected pending home sales to edge up by another 0.3 percent.
Investor concerns over Greece and Spain persisted on Thursday. Spain is presenting its draft budget for 2013 later today, which is expected to include more economic reforms, including further cutbacks, pension reform and new taxes on greenhouse emissions. Protests continued in Madrid against the expected austerity measures, which may pave the way for an official aid request.
Italy witnessed yet another decline in borrowing costs at an auction of its five and ten-year bonds on Thursday as investors took a favorable view on the country over Spain. Meanwhile, the lingering uncertainty regarding a bailout request from Spain continued to push the country's borrowing costs higher today.
The dollar has struggled to pick a direction in comparison to the Euro. The currency reached a high of $1.2827 Thursday, but has since pulled back to around $1.2890.
Eurozone economic confidence declined for the seventh consecutive month in September, reflecting weakness across all sectors except construction. Eurozone economic confidence deteriorated to 85 in September from 86.1 in August, survey data from European Commission showed Thursday. The reading was forecast to remain unchanged at 86.1.
Germany's import price inflation rose more than expected in August, the Federal Statistical Office reported Thursday. Import prices grew 3.2 percent year-on-year in August, sharper than the June's growth of 1.2 percent. The annual growth was the fastest since February and exceeded the 2.7 percent rise forecast by economists.
Unemployment in France crossed the 3-million mark in August for the first time in more than a decade as weak economic activity continued to hamper government's efforts to prop up the job market.
The unemployment rate in Germany remained unchanged at 5.5 percent on a seasonally adjusted basis in August, data released by the Federal Statistical Office showed Thursday.
German unemployment increased for the sixth consecutive month in September as companies struggled with weak orders amid fears of looming recession in the euro area.
The unemployment increased by 9,000 in September from the previous month, the Federal Labor Agency said Thursday. Economists had forecast unemployment to rise by 10,000. The number of unemployed rose by a revised 11,000 in August.
Data published by the Labor Ministry on late Wednesday showed that the number of job seekers registered at employment offices in France totaled 3.011 million at end-August. This was the first time since 1999 that the figure exceeded 3 million.
The buck has pulled back from yesterday's high of $1.6136 versus the pound sterling Thursday, to around $1.6220.
The U.K. economy shrank 0.4 percent in the second quarter from a quarter ago, which was smaller than the 0.5 percent decline previously estimated, final data from the Office for National Statistics showed Thursday.
Nonetheless, the economy remains in double-dip recession. Gross domestic product was down 0.3 percent in the first quarter and fell 0.4 percent in the fourth quarter of 2011.
The greenback has remained little changed versus the Japanese Yen on Thursday, hovering around Y77.640 level, just slightly above Wednesday's low of Y77.580.
by RTT Staff Writer
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