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U.S. Dollar Extends Pullback On Strong Manufacturing Data

Extending the pullback seen in the previous day, the value of the U.S. dollar has moved to the downside during trading on Thursday.

The U.S. dollar index showed a lack of direction in early morning trading but is currently down by 0.3 percent at 92.91.

The greenback is trading at 110.62 yen versus the 110.72 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1773 compared to yesterday's $1.1730.

The drop in the value of the U.S. dollar comes as the release of strong reading on U.S. manufacturing activity has reduced the appeal of the safe haven currency.

A report from the Institute for Supply Management showed the pace of growth in U.S. manufacturing activity accelerated by much more than anticipated in the month of March.

The ISM said its Manufacturing PMI jumped to 64.7 in March from 60.8 in February, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 61.3.

With the much bigger than expected increase, the Manufacturing PMI reached its highest level since hitting 69.9 in December of 1983.

Meanwhile, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rebounded from their lowest level in a year in the week ended March 27th.

The report said initial jobless claims rose to 719,000, an increase of 61,000 from the previous week's revised level of 658,000.

Economists had expected jobless claims to edge down to 680,000 from the 684,000 originally reported for the previous week.

The downwardly revised number of claims in the previous week was the lowest since the week ended March 14, 2020, just before the start of the coronavirus lockdowns.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report for March.

Economists currently expect employment to jump by 647,000 jobs in March after climbing by 379,000 jobs in February. The unemployment rate is expected to drop to 6.0 percent from 6.2 percent.

Traders are also reacting to President Joe Biden's speech regarding his $2 trillion infrastructure and economic recovery plan.

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