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Dollar Gaining Ground After Better Than Expected Jobless Claims

Dollar Gaining Ground After Better Than Expected Jobless Claims

The dollar has rebounded from its early weakness against its major European competitors on Thursday and has extended its gains against the Japanese Yen. The reversal followed the release of the better than expected weekly jobless claims data.

First-time claims for U.S. unemployment benefits showed an unexpected decrease in the week ended December 22nd, according to a report released by the Labor Department on Thursday. The report said initial jobless claims fell to 350,000, a decrease of 12,000 from the previous week's revised figure of 362,000.

The drop came as a surprise to economists, who had expected jobless claims to edge up to 365,000 from the 361,000 originally reported for the previous week.

With worries about the looming fiscal cliff weighing on consumer expectations, the Conference Board released a report on Thursday showing that U.S. consumer confidence deteriorated by much more than anticipated in the month of December.

The Conference Board said its consumer confidence index fell to 65.1 in December from a downwardly revised 71.5 in November. Economists had been expecting the index to dip to 70.0 from the 73.7 originally reported for the previous month.

New home sales in the U.S. rebounded in the month of November, according to a report released by the Commerce Department on Thursday, with sales rising to their highest level in over two years.

The report said new home sales rose 4.4 percent to a seasonally adjusted annual rate of 377,000 from the revised October rate of 361,000. The increase comes after new home sales fell by 3.5 percent in October.

Economists had been expecting new home sales to climb to 378,000 from the 368,000 originally reported for the previous month.

President Barack Obama and members of the Senate will try to revive budget crisis talks today to avert or at least postpone the looming "fiscal cliff" of tax increases and government spending cuts that are set to come into force on January 1.

The European Central Bank should force the countries seeking help under the Outright Monetary Transactions, OMT, to implement economic reforms, Governing Council member Luc Coene said in an interview with Belgian weekly magazine Trends/Tendances.

"If we give in, the ECB will lose all credibility," Coene said. "This is the line that we have drawn, and we cannot and will not cross it."

The dollar dropped to a low of $1.3283 against the Euro Thursday morning, but has since bounced back to around $1.3215.

France's producer prices increased at a slower rate in November than expected by economists, data released by statistical office Insee showed Thursday. The producer price index for the domestic market increased 1.9 percent on an annual basis in November, while economists were looking for a 2.1 percent gain.

On a monthly basis, output prices in the French market decreased 0.5 percent in November, a tad faster than the 0.3 percent drop economists expected. In October, prices had moved up 0.5 percent sequentially.

Confidence among French consumers improved in December for the first time since May this year, the latest figures from the statistical office Insee showed Thursday. The headline synthetic index rose to 86 in December from 84 in November. Economists expected the index reading to remain at previous month's level.

France's general government debt declined in the third quarter, the latest figures from the statistical office Insee showed Thursday. At the end of the third quarter, debt reached 89.9 percent of gross domestic product, down from 91 percent of GDP in the second quarter.

The buck fell to a low of $1.6201 against the pound sterling Thursday, but has since rebounded to around $1.6080.

U.K. mortgage approvals for house purchases increased less than expected to 33,634 in November from 33,128 in October, British Bankers' Association said Thursday. The expected level was 34,500.

Japan's newly appointed Finance Minister Taro Aso said on Thursday that the government will limit fresh issuance of bonds while compiling the fiscal 2013 budget. Aso stressed that the new government will not stick to JPY 44 trillion bond issuance cap set by the previous government. He plans to compile the economic stimulus package by January 7.

The greenback has extended its gains against the Japanese Yen to a fourth consecutive session Thursday and has reached Y86.141, its highest level since mid-August 2010.

Japan's housing starts grew at a pace of 10.3 percent year-on-year in November, down sharply from 25.2 percent growth seen in October, the Ministry of Land, Infrastructure, Transport and Tourism said Thursday. It was forecast to advance 10.7 percent in November.

by RTT Staff Writer

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