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Dollar Weakens Following Jobless Claims Report


The dollar has weakened against its major European rivals on Thursday, but has held steady versus the Japanese Yen. U.S. weekly jobless claims increased more than expected and the producer price index for March came in below expectations.

Statements made Wednesday evening by Federal Reserve Vice Chairman Janet Yellen seem to be the main cause of today's weakness in the U.S. currency. She affirmed the Fed's expectations to keep benchmark interest rates near zero through at least late 2014.

However, Yellen also stated that "further easing actions could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates."

The dollar has dropped below a range around the $1.31 level and has reached over a one-week low of $1.3212 versus the Euro on Thursday.

Industrial production in the euro area unexpectedly increased in February, helped by a marked increase in energy production, data released by statistical office Eurostat showed Thursday. Industrial production moved up 0.5 percent on a monthly basis in February, after remaining flat in the previous month. Economists were looking for a 0.2 percent decrease.

The greenback has fallen $1.5984 versus the pound sterling, its lowest level since April 2.

The buck has remained basically flat in comparison to the Japanese Yen on Thursday, hovering around Y80.75.

Bank of Japan Governor Masaaki Shirakawa on Thursday said that the central bank will continue powerful monetary easing and warned that uncertainty over global economy still remained high.

First-time claims for U.S. unemployment benefits showed a notable increase in the week ended April 7th, according to a report released by the Labor Department on Thursday, with the data raising some concerns about the outlook for the jobs market.

The report showed that initial jobless claims rose to 380,000 from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 359,000 from the 357,000 originally reported for the previous week.

With energy prices falling in the month of March, the Labor Department released a report on Thursday showing that producer prices for the month unexpectedly came in unchanged. The Labor Department said its producer price index was flat in March following a 0.4 percent increase in February. Economists had been expecting the index to increase by 0.3 percent.

The U.S. trade deficit shrank dramatically in February, according to figures released Thursday by the Commerce Department, with the decrease in the size of the deficit reflecting a sharp drop in the value of imports. The report showed that the trade deficit narrowed to $46.0 billion in February from $52.5 billion in January. Most economists had expected the deficit to shrink somewhat from January, but the consensus had the deficit much wider at around $51.7 billion.

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