The dollar is turning in a mixed performance against its major competitors Thursday afternoon. The U.S. currency is down slightly against the Japanese Yen and modestly higher against the pound sterling. The gains in the dollar are a bit more pronounced against the Euro after the ECB hinted that it would be willing to provide further stimulus measures should it prove necessary.
Investors will now shift their focus to the release of the U.S. employment report for August on Friday. The result may prove crucial to the Federal Reserve's decision on interest rates in September.
A day ahead of tomorrow's monthly jobs report, the Labor Department released a report on Thursday showing that first-time claims for U.S. unemployment benefits rose more than expected in the week ended August 29th.
The report said initial jobless claims climbed to 282,000, an increase of 12,000 from the previous week's revised level of 270,000. Economists had expected jobless claims to edge up to 273,000 from the 271,000 originally reported for the previous week.
With the value of exports rising and the value of imports falling, the Commerce Department released a report on Thursday showing a notably narrower U.S. trade deficit in the month of July. The report said the trade deficit narrowed to $41.9 billion in July from a revised $45.2 billion in June. The deficit was the smallest since February.
Economists had expected the deficit to narrow to $42.0 billion from the $43.8 billion originally reported for the previous month.
After reporting a substantial acceleration in the pace of U.S. service sector growth in the previous month, the Institute for Supply Management released a report on Thursday showing a modest slowdown in the pace of growth in August.
The ISM said its non-manufacturing index edged down to 59.0 in August from 60.3 in July, although a reading above 50 indicates continued growth in the service sector. Economists had expected the index to dip to 58.5.
The European Central Bank left its interest rates unchanged on Thursday as recent data suggest that economic recovery is continuing, albeit at a sluggish pace, while lower oil prices, stronger euro and the Chinese slowdown pose risks to the outlook.
The European Central Bank lowered the economic growth and inflation outlook for the euro area on Thursday, citing more downside risks that have emerged recently, and said that it was ready to extend its quantitative easing programme beyond the September 2016 deadline, if needed.
The dollar jumped to a 2-week high of $1.1086 against the Euro Thursday, but has since eased back to around $1.1130.
Eurozone retail sales increased in July after falling a month ago, data from Eurostat showed Thursday. Retail sales advanced 0.4 percent in July from the prior month, reversing a revised 0.2 percent fall in June. This was the fastest growth in three months.
Economists had forecast sales to grow at a faster pace of 0.5 percent. The figure for June was revised from a 0.6 percent fall initially estimated.
Eurozone private sector growth improved more than estimated in August, final data from Markit showed Thursday. The final composite output index rose to 54.3 in August from 53.9 in July. The flash reading for August was 54.1. Output growth accelerated moderately in both the manufacturing and service sectors.
Germany's private sector growth accelerated more than initially estimated to a 5-month high in August, final data from Markit showed Thursday. The composite output index rose to 55 in August from 53.7 in July. The flash reading for August was 54.0. The index signaled the strongest increase in private sector output since March.
The French private sector growth slowed more than estimated to a 7-month low in August, final data from Markit showed Thursday. The final composite output index fell to 50.2 in August from 51.5 in July. It was well below the flash score of 51.3.
The buck climbed to nearly a 2-month high of $1.5217 against the pound sterling Thursday, but has since slipped back to around $1.5250.
British services sector expanded at its weakest rate in over two years casting doubt about sustainability of economic growth into third quarter, a closely watched survey revealed Thursday. The services Purchasing Managers' Index dropped to 55.6, which was the weakest score since May 2013, survey results from Markit Economics and the Chartered Institute of Procurement & Supply showed.
That was in contrast to economists' expectation for a modest improvement in the reading to 57.7 from 57.4 in July. The growth slowed for second straight month.
The greenback has pulled back to around Y119.950 against the Japanese Yen this afternoon, from an early high of Y120.698.
The services sector in Japan continued to expand in August, and at a faster pace, the latest survey from Nikkei showed on Thursday with a PMI score of 53.7. That's up from 51.2 in July, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.
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