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Dollar Rebounding On Trump Comments


The dollar was down against all of its major rivals for much of Thursday's session, but has staged a recovery this afternoon. The reversal was sparked by comments from President Donald Trump. A day after remarks from Treasury Secretary Steve Mnuchin advocating a weak dollar, Trump said the currency will only get "stronger and stronger."

After reporting first-time claims for U.S. unemployment benefits at their lowest level in nearly 45 years in the previous week, the Labor Department released a report on Thursday showing a rebound in initial jobless claims in the week ended January 20th.

The report said initial jobless claims rose to 233,000, an increase of 17,000 from the previous week's revised level of 216,000. Economists had expected jobless claims to climb to 240,000 from the 218,000 originally reported for the previous week.

After reporting a sharp increase in U.S. new home sales in the previous month, the Commerce Department released a report on Thursday showing a bigger than expected pullback in new home sales in the month of December.

The report said new home sales plunged by 9.3 percent to an annual rate of 625,000 in December after surging up by 15 percent to a revised rate of 689,000 in November. Economists had expected new home sales to slump to a rate of 679,000 from the 733,000 originally reported for the previous month.

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

The Conference Board said its leading economic index climbed by 0.6 percent in December after rising by an upwardly revised 0.5 percent in November. Economists had expected the index to rise by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

The European Central Bank left its key interest rates and asset purchases unchanged on Thursday and reiterated its forward guidance that rates will remain at present level well past the life of the stimulus and that it is ready to raise the size as well as duration of asset buys, if needed.

"The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases," the ECB reiterated.

Concerns over exchange rate volatility and its causes dominated European Central Bank President Mario Draghi's press conference on Thursday, where he concluded that the recent surge in euro was a source of concern and asserted that an interest rate hike was unlikely this year.

He also said that "several ECB policymakers expressed concern" over the recent statements from the US and such worries were "broader than the exchange rate, but the status of international relations right now."

The dollar tumbled to over a 3-year low of $1.2537 against the Euro Thursday, but has since bounced back to around $1.2375.

Germany's consumer confidence is set to strengthen in February on strong economic and income expectations, survey data from market research group GfK showed Thursday. The forward-looking consumer sentiment index rose 0.2 points to 11.0 in February. The score was forecast to remain unchanged at 10.8.

Germany's business confidence improved in January, reports said citing survey data from Ifo institute on Thursday. The business confidence index rose to 117.6 in January from 117.2 in December. The expected score was 117.0.

The buck dropped to over an 18-month low of $1.4345 against the pound sterling Thursday, but has since rebounded to around $1.4085.

UK mortgage approvals fell to the lowest level in more than three years in December, data from UK Finance showed Thursday. The number of mortgages approved in December totaled 36,115 compared to 39,007 in November. This was the lowest since April 2013, when approvals totaled 33,986.

UK retail sales grew less than anticipated in January after Christmas sales, the Distributive Trades survey from the Confederation of British Industry showed Thursday. The retail sales balance came in at 12 percent in January, undershooting expectations of 17 percent.

The greenback fell to a 4-month low of Y108.490 against the Japanese Yen Thursday, but has since climbed back to around Y109.675.

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