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Dollar Reversing Early Gains


The dollar posted gains against its major rivals early Thursday, but has since reversed and turned lower in the afternoon. The reversal seems to coincide with today's announcement from President Donald Trump that tariffs will be imposed on steel and aluminum imports.

Traders were confronted by a high volume of economic data this morning. For the second consecutive week, the Labor Department released a report on Thursday unexpectedly showing a weekly decline in first-time claims for U.S. unemployment benefits. The report said initial jobless claims fell to 210,000 in the week ended February 24th, a decrease of 10,000 from the previous week's revised level of 220,000.

Economists had expected jobless claims to inch up to 226,000 from the 222,000 originally reported for the previous week.

A report released by the Commerce Department on Thursday showed U.S. personal income increased by slightly more than expected in the month of January, while personal spending rose in line with estimates.

The Commerce Department said personal income climbed by 0.4 percent in January, matching the increase seen in December. Economists had expected income to rise by 0.3 percent.

Additionally, the report said personal spending edged up by 0.2 percent in January after climbing by an upwardly revised 0.4 percent in December. Personal spending had been expected to rise by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Indicating an unexpected acceleration in the pace of growth in the U.S. manufacturing sector, the Institute for Supply Management released a report on Thursday showing its index of activity in the sector rose to a nearly fourteen-year high in February.

The ISM said its purchasing managers index climbed to 60.8 in February from 59.1 in January, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to edge down to 58.7.

With a decrease in spending on private construction offsetting a jump in spending on public construction, the Commerce Department released a report on Thursday showing U.S. construction spending was roughly unchanged in the month of January.

Construction spending in January was estimated at an annual rate of $1.263 trillion, nearly the same as the revised December estimate. Economists had expected construction spending to rise by 0.3 percent.

The dollar has dropped to around $1.2250 against the Euro Thursday afternoon, from an early high of $1.2153.

The Eurozone manufacturing sector continued to expand at a robust pace in February but the pace of growth slowed from January, final data from IHS Markit showed Thursday. The factory Purchasing Managers' Index fell to a 4-month low of 58.6 from 59.6 in January. Nonetheless, the score was above the flash 58.5.

The euro area unemployment rate remained unchanged in January, data published by Eurostat showed Thursday. The jobless rate held steady at 8.6 percent in January, but down from 9.6 percent registered in the same period of last year. This was the lowest rate recorded in the euro area since December 2008.

The buck climbed to an early high of $1.3710 against the pound sterling Thursday, but has since slipped to around $1.3765.

The British manufacturing sector expanded at the weakest pace in eight months in February, survey data from IHS Markit and the Chartered Institute of Procurement & Supply showed Thursday. The Purchasing Managers' Index, or PMI, dropped slightly to 55.2 in February from 55.3 in January. Economists had expected the index to fall to 55.0.

UK mortgage approvals rose to a 6-month high in January, the Bank of England reported Thursday. The number of mortgages approved in January rose to 67,478 from 61,692 in December. This was the highest level since July 2017 and above consensus of 62,000.

UK house prices increased at the slowest pace in six months in February, data from Nationwide Building Society showed Thursday.

House prices climbed 2.2 percent year-on-year in February, weaker than January's 3.2 percent increase. This was the slowest since August, when prices grew 2.1 percent. House price inflation was forecast to slow to 2.6 percent.

The greenback rose to a high of Y107.200 against the Japanese Yen Thursday, but has since eased back to around Y106.235.

Capital spending in Japan was up 4.3 percent on quarter in the fourth quarter of 2017, the Ministry of Finance said on Thursday. That exceeded expectations for 3.0 percent and was up from 4.2 percent in the three months prior.

The manufacturing sector in Japan continued to expand in February, albeit at a slightly slower rate, the latest survey from Nikkei revealed on Thursday with a manufacturing PMI score of 54.1. That's down from 54.8 in January, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

Japan's consumer confidence weakened unexpectedly in February, though slightly, survey data from the Cabinet Office showed Thursday. The seasonally adjusted consumer confidence index dropped to 44.3 in February from 44.7 in January.

Meanwhile, economists had expected the index to rise to 44.8.

by RTT Staff Writer

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