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Dollar Mixed Thursday Following GDP Report


The dollar is currently trading mixed against its major competitors on Thursday. The U.S. currency is gaining ground against the Euro, but is declining against the pound sterling. The buck is nearly unchanged in comparison to the Japanese Yen.

While fourth quarter U.S. GDP data was revised to show economic growth compared to the previously reported contraction, the pace of growth fell well short of economist estimates. A report released by the Commerce Department on Thursday said GDP increased at an annual rate of 0.1 percent in the fourth quarter compared to the 0.1 percent drop that was originally reported.

Economists had been expecting a more substantial upward revision, with the consensus estimate calling for the revised report to show 0.5 percent growth.

In an upbeat sign for the job market, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits fell by much more than anticipated in the week ended February 23rd. The report said initial jobless claims dropped to 344,000, a decrease of 22,000 from the previous week's revised figure of 366,000.

Economists had expected jobless claims to edge down to 360,000 from the 362,000 originally reported for the previous week.

Chicago-area business activity unexpectedly increased at a faster rate in the month of February, according to a report released by the Institute for Supply Management - Chicago on Thursday, with the business barometer rising to its highest level in almost a year.

The report said the Chicago business barometer rose to 56.8 in February from 55.6 in January, with a reading above 50 indicating an increase in business activity. The increase came as a surprise to economists, who had expected the barometer to edge down to 55.0.

European Central Bank President Mario Draghi indicated that the central bank is in no hurry to exit stimulus as he anticipates inflation to come significantly below the bank's target this year, giving room for maintaining an accommodative monetary stance.

ECB policymakers are "far" from considering an exit from the current accommodative stance, Draghi said during a speech at the Catholic Academy of Bavaria on Wednesday. He said the central bank forecasts next year's inflation to be significantly below the 2 percent target.

The dollar is rebounding from yesterday's 2-session low of $1.3160 against the Euro, to around $1.3080 on Thursday.

Inflation in the euro area, as per the harmonized index of consumer prices, weakened in January as estimated earlier, final data from statistical office Eurostat showed Thursday. The harmonized index of consumer prices (HICP), measured under the EU methodology, increased 2 percent on an annual basis in January, after rising 2.2 percent in December. The latest figure matched preliminary estimates.

Eurocoin indicator, a measure of economic climate in the euro area, rose for a third consecutive month in February to its highest level in eight months, survey data from the Bank of Italy and the think tank CEPR showed Thursday.

The eurocoin indicator, designed to reflect the current economic situation in the Eurozone, climbed to -0.20 from January's -0.23. The score is the highest since June last year.

Unemployment in Germany declined unexpectedly in February and for a third consecutive month, suggesting that the economy has started to recover in the first months of 2013 after a contraction in the final quarter of 2012.

The number of unemployed declined by 3,000 in February from the previous month to 2.917 million, the Federal Labor Agency said Thursday. This was contrary to expectations for no change. In January, unemployment fell by a revised 14,000.

Unemployment rate in Germany remained unchanged at 5.3 percent on an adjusted basis in January, data from the Federal Statistical Office showed Thursday. On the other hand, the unadjusted jobless rate rose to 5.9 percent in January from 5.3 percent in December.

Germany's EU harmonized inflation slowed less than economists expected in February, latest data showed Thursday. Inflation as per the harmonized index of consumer prices (HICP) dropped to 1.8 percent in February from 1.9 percent in January, preliminary data from the Federal Statistical Office showed. Economists had forecast a faster deceleration to 1.7 percent.

France's producer price inflation surpassed economists' expectations in January, data released by statistical office Insee showed Thursday. The producer price index for the domestic market increased 1.4 percent on an annual basis in January, slightly faster than the 1.3 percent gain economists had forecast.

French households' consumption of goods decreased in January after rising in the previous month, and the rate of fall exceeded economists' forecast, latest data showed Thursday. Overall consumer spending decreased 0.8 percent on a monthly basis in January, after rising 0.2 percent in December, statistical office Insee said. Economists had forecast a more modest decrease of 0.3 percent.

The buck is adding to yesterday's weakness against the pound sterling on Thursday, falling to around $1.5185.

House prices in England and Wales rose at a faster rate in January, data from the U.K. Land Registry showed Thursday. The house price index climbed 1 percent from December, when prices rose 0.8 percent. The annual increase in January was also 1 percent compared to 1.7 percent in the previous month. An average house in England and Wales now costs GBP 162,441.

Japanese Prime Minister Shinzo Abe on Thursday nominated Asian Development Bank President Haruhiko Kuroda for the post of Bank of Japan Governor, boosting expectations that the central bank will go ahead with plans to further expand stimulus.

Kuroda, a long-time proponent of inflation targeting, has suggested that Japan should achieve 2 percent inflation in two years. He also supports additional purchase of government bonds by the central bank.

Abe also picked academic Kikuo Iwata and BoJ official Hiroshi Nakaso as the central bank's deputy governors. The Cabinet submitted the nominations to a Parliamentary Committee on Thursday.

The greenback has been remained basically flat against the Japanese Yen on Thursday, hovering around the Y92.300 level.

Industrial output in Japan was up a seasonally adjusted 1.0 percent on month in January, the Ministry of Economy, Trade and Industry said in Thursday's preliminary reading - rising for the second straight month. The headline figure was shy of forecasts for an increase of 1.5 percent following the 2.4 percent gain in December.

Japan's housing starts growth halved to 5 percent in January from 10 percent in December, the Ministry of Land, Infrastructure, Transport and Tourism said Thursday. The annual growth was forecast to ease to 8.8 percent. Annualized housing starts fell to 863,000 from 880,000 in the prior month and stayed below the expected level of 894,000.

by RTTNews Staff Writer

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