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Dollar Mostly Higher After Data Deluge


The dollar is rising against the Euro and the Japanese Yen Thursday afternoon, following the release of a slew of U.S. economic reports. Investors also continue to react to yesterday's policy decision from the Federal Reserve. The Fed raised interest rates by a quarter point, as expected, but struck a more hawkish tone than traders had anticipated. The central bank is forecasting one more rate hike in 2017.

A report released by the Labor Department on Thursday showed a bigger than expected drop in import prices in the month of May, reflecting a steep decline in prices for fuel imports.

The number of people filing first-time unemployment claims fell last week, according to government statistics released Thursday. The figure came in below the amount economists were expecting.

The U.S. Labor Department revealed that initial jobless claims slipped to 237,000 for the week ending June 10. This was down 8,000 from the unrevised 245,000 that was reported for the previous week. Economists had expected the figure to come in at 243,000.

The Labor Department said its import price index fell by 0.3 percent in May after rising by 0.2 percent in April. Economists had expected import prices to edge down by 0.1 percent.

The report also said export prices slid by 0.7 percent in May following a 0.2 percent increase in the previous month. Export prices had been expected to inch up by 0.1 percent.

Growth in Philadelphia-area manufacturing activity slowed in the month of June, 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 decreased to 27.6 in June from 38.8 in May, although a positive reading still indicates growth. The index had been expected to drop to 24.0.

After reporting a contraction in regional manufacturing activity in the previous month, the Federal Reserve Bank of New York released a report on Thursday showing a rebound in activity in the month of June.

The New York Fed said its general business conditions index shot up to 19.8 in June from a negative 1.0 in May, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to rise to 4.0.

With a drop in manufacturing output offsetting increases in mining and utilities output, the Federal Reserve released a report on Thursday showing that U.S. industrial production was unchanged in the month of May.

The Fed said industrial production was flat in May after jumping by 1.1 percent in April. Economists had expected production to rise by 0.2 percent.

Homebuilder confidence in the U.S. unexpectedly decreased in the month of June, according to a report released by the National Association of Home Builders on Thursday. The report said the NAHB /Wells Fargo Housing Market Index dropped to 67 in June from 69 in

The dollar has climbed to over a 2-week high of $1.1150 against the Euro Thursday afternoon, from an early low of $1.1228.

The euro area trade surplus decreased in April from a month ago, as exports fell faster than imports, preliminary data from Eurostat showed Thursday. The seasonally adjusted trade surplus fell to EUR 19.6 billion in April from EUR 22.2 billion March. Economists had expected the surplus to drop slightly to EUR 22.0 billion.

France's consumer price inflation eased as estimated in May, final data from the statistical office Insee showed Thursday. Consumer prices climbed 0.8 percent year-on-year in May, slower than the 1.2 percent rise seen in April. The annual rate matched preliminary estimate published on May 31.

The Bank of England decided to leave its record low interest rate unchanged on Thursday, but the split among policymakers widened as more members sought a hike, citing the rising inflation.

The Monetary Policy Committee, headed by Governor Mark Carney, voted 5-3 to hold the interest rate at a record low of 0.25 percent. However, all eight members voted to maintain the quantitative easing at GBP 435 billion.

Along with Kristin Forbes, Ian McCafferty and Michael Saunders also sought a 25 basis point increase in interest rate in the latest session. Forbes is set to step down from the rate-setting body and will not be present at the next session on August 3.

For these members, the outlook justified an immediate increase in Bank Rate. Further, they also pointed out that the slack in the labor market appeared to have diminished.

The buck rose to an early high of $1.2683 against the pound sterling Thursday, but has since retreated to around $1.2750.

UK retail sales declined more than expected in May, figures from the Office for National Statistics showed Thursday. Retail sales volume including auto fuel declined 1.2 percent month-on-month in May, reversing a 2.5 percent rise in April. Sales were forecast to drop 0.8 percent.

The greenback has broken out to over a 1-week high of Y110.950 against the Japanese Yen Thursday afternoon, from an early low of Y109.391.

by RTTNews Staff Writer

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