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Dollar Falling Along With Treasury Yields


The dollar got off to a positive start Thursday, but has turned weaker in the afternoon along with U.S. treasury yields. The yield on 10-year notes have pulled back from yesterday's 4-year high. Meanwhile, traders reacted positively to a pair of better than expected U.S. economic reports this morning.

A report released by the Labor Department on Thursday unexpectedly showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 17th. The report said initial jobless claims dipped to 222,000, a decrease of 7,000 from the previous week's revised level of 229,000.

The drop surprised economists, who had expected jobless claims to come in unchanged compared to the 230,000 originally reported for the previous month.

Pointing to robust economic growth in the first half of 2018, the Conference Board released a report on Thursday showing a bigger than expected increase by its index of leading U.S. economic indicators in the month of January.

The Conference Board said its leading economic index jumped by 1.0 percent in January after climbing by 0.6 percent in December. Economists had been expecting another 0.6 percent increase.

Policymakers at the European Central Bank judged that it was too early to change the policy communication despite the increased confidence that inflation would move near its target, minutes of the latest policy session showed Thursday.

"Members broadly agreed that any further evolution of the Governing Council's communication on monetary policy would be gradual and would proceed in line with improvements in the medium-term inflation outlook," the minutes, which the ECB calls "account" of the policy session held on January 24-25 revealed.

"Communication would evolve naturally in line with the ECB's forward guidance" as inflation progress towards the bank's aim of "below, but close to 2 percent" in a sustainable manner, the minutes said.

The dollar has dropped to around $1.2325 against the Euro Thursday afternoon, from an early high of $1.2258.

Germany's business confidence weakened notably in February as near term outlook of firms deteriorated on political uncertainty and market turmoil, survey data from the Munich-based Ifo Institute showed Thursday. The business sentiment index fell more-than-expected to 115.4 from 117.6 in January. The score was expected to ease to 117 in February. A similar lower reading was last seen in September 2017.

France's consumer price inflation increased less than estimated in January, final data from the statistical office Insee showed Thursday. Consumer prices advanced 1.3 percent year-on-year in January, slower than the 1.2 percent increase seen in December. The initial estimate was 1.4 percent.

The buck has fallen to around $1.3965 against the pound sterling this afternoon, from a high of $1.3855 this morning.

The UK economy grew less-than-estimated in the fourth quarter, largely due to a downward revision to production output.

Gross domestic product expanded 0.4 percent sequentially instead of 0.5 percent reported initially, the second estimate from the Office for National Statistics showed Thursday. GDP had advanced 0.5 percent in the third quarter.

The greenback reached an early high of Y107.760 against the Japanese Yen Thursday, but has since retreated to around Y106.700.

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