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Dollar Rebounding On Upbeat Economic Data

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The dollar is rising against all of its major rivals Thursday afternoon, following yesterday's pullback. While investors remain concerned over the political uncertainty that has been sparked by the reports that President Trump may have meddled with the FBI investigation into Russian ties with Washington, they were encouraged by some solid U.S. economic data.

In an upbeat sign for the labor market, the Labor Department released a report on Thursday showing another unexpected drop in first-time claims for U.S. unemployment benefits in the week ended May 13th. The report said initial jobless claims edged down to 232,000, a decrease of 4,000 from the previous week's unrevised level of 236,000. Economists had expected jobless claims to rise to 240,000.

Philadelphia-area manufacturing activity has unexpectedly expanded at a faster pace in the month of May, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday. The Philly Fed said its index for current manufacturing activity in the region climbed to 38.8 in May from 22.0 in April, with a positive reading indicating growth. The index had been expected to dip to 19.5.

A report released by the Conference Board on Thursday showed that its index of leading U.S. economic indicators rose in line with economist estimates in the month of April. The Conference Board said its leading economic index rose by 0.3 percent in April, matching the downwardly revised increase in March as well as expectations.

Policymakers agreed that there was a need for great caution in undertaking even subtle changes in communication so as to avoid market volatility similar to the 'taper tantrum' in 2013, the minutes of the minutes of the European Central Bank's policy session on April 26-27 revealed Thursday.

"It was felt that the Governing Council's communication should be adjusted in a very gradual and cautious manner as, at the current juncture, monetary and financial conditions were particularly sensitive to changes in communication," the minutes, which the ECB calls "the account", said.

"After a long period of very accommodative monetary conditions, even small and incremental changes in communication could have strong signaling effects when interpreted as heralding a change in the monetary policy stance."
The dollar has climbed to around $1.11 against the Euro Thursday afternoon, from an early low of $1.1171.

France's unemployment rate based on ILO norms unexpectedly dropped in the first quarter to its lowest level in five years, preliminary data from INSEE showed Thursday. The ILO unemployment rate fell to 9.6 percent from 10 percent in each of the previous three quarters. Economists had expected the figure to hold steady.

The buck sank to a 7 1/2 month low of $1.3047 against the pound sterling Thursday morning, but has since rebounded to around $1.2930.

UK retail sales recovered at a faster than expected pace in April, figures from the Office for National Statistics showed Thursday.

Retail sales volume including auto fuel grew 2.3 percent month-on-month, reversing a 1.4 percent drop in March. This was the fastest growth since January 2016, and above the expected rate of 1.1 percent. Economists had forecast a moderate 1 percent expansion.

The greenback slipped to an early low of Y110.232 against the Japanese Yen Thursday morning, but has since bounced back to around Y111.550.

Japan's gross domestic product gained 0.5 percent on quarter in the first three months of 2017, the Cabinet Office said in Thursday's preliminary reading. That was in line with expectations and up from 0.3 percent in the previous three months.

by RTT Staff Writer

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