The dollar is currently trading mixed against its major competitors Thursday. The currency is adding a bit to some recent weakness against its major European competitors, but rising sharply against the Japanese Yen. The U.S. economic data released this morning exceeded expectations. The results of the European Central Bank meeting and the Bank of England meeting were also in focus.
The European Central Bank on Thursday unveiled its latest crisis-fighting tool to help lower the borrowing costs for troubled nations as any further deterioration of the euro area sovereign debt crisis threatens to hurt the already weak economy.
While presenting his introductory statement in the regular post-decision press conference in Frankfurt, Draghi announced the ECB's new bond buying programme would embark on "outright monetary transactions" or OMTs which will allow the bank to purchase sovereign bonds in the secondary markets.
"We need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area," Draghi said. The aim is to safeguard an appropriate monetary policy transmission and the singleness of the monetary policy, the bank said.
The central bank today decided to leave the interest rates unchanged for the second consecutive month as it expects inflation to stay above 2 percent through 2012. The underlying pace of monetary expansion remains subdued and euro area growth is likely to remain weak, the bank said.
The dollar has added slightly to yesterday's losses versus the Euro on Thursday, reaching a 2-month low of $1.2650.
The Eurozone economy contracted as expected in the second quarter as a marked improvement in export growth was offset by a further fall in investment amid the unresolved debt crisis.
Gross domestic product, or GDP, decreased a seasonally adjusted 0.2 percent sequentially after remaining unchanged in first three months of 2012, statistical office Eurostat said. The GDP reading was in line with the initial estimates.
Germany's factory orders grew by a more than expected 0.5 percent in July from June, data from the Federal Ministry of Economy and Technology showed Thursday. Economists had forecast a 0.3 percent growth after declining 1.6 percent in June. Domestic demand rose 1 percent and foreign orders edged up 0.1 percent.
Germany's construction activity contracted at a slower rate in August, survey results from Markit Economics showed Thursday. The seasonally adjusted Germany Construction Purchasing Managers' Index - a single figure snapshot of overall activity in the construction economy, rose to a four-month high of 47.8 in August from 44.6 in July.
French jobless rate under the definition of International Labor Organization increased marginally in the second quarter, figures from the statistical office Insee showed Thursday. The overall unemployment rate rose to 10.2 percent in the second quarter from 10 percent in the first quarter. This was in line with economists' forecast.
Bank of England policymakers on Thursday refrained from expanding their quantitative easing, as the current GBP 50 billion extension is set to last through November. That said, the case for more stimulus is seen in the pipeline, given the weak economic condition.
The Monetary Policy Committee headed by Governor Mervyn King maintained the quantitative easing programme at GBP 375 billion. The size of its asset purchase program was last expanded in July, when it was lifted by GBP 50 billion.
It also left the Bank Rate unchanged at 0.50 percent as widely expected. The rate currently stands at the lowest level since the bank was established in 1694. The rate has been retained at the current 0.50 percent since March 2009.
The greenback has also extended yesterday's losses versus the pound sterling Thursday, reaching a 2 1/2 month low of $1.5942.
U.K. house prices declined for the second straight month in August and continue to tread water, Lloyds Banking Group's Halifax division said Thursday.
House prices were down 0.4 percent from a month ago, when it fell 0.7 percent. The two successive decreases largely canceled out the increases recorded in May and June. Economists had forecast a 0.2 percent rise for August.
The buck has broken out of over a 2-day trading range, around Y78.400, versus the Japanese Yen on Thursday, to over a 2-week high of Y79.026.
Private sector employment in the U.S. rose by much more than expected in the month of August, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Thursday, with the data likely to generate some optimism about the government report due on Friday.
ADP said private sector employment increased by 201,000 jobs in August following a revised increase of 173,000 jobs in July. Economists had expected employment to increase by about 149,000 jobs compared to the addition of 163,000 jobs originally reported for the previous month.
In another upbeat sign for the sluggish labor market, the Labor Department released a report Thursday morning showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 1st.
The report said initial jobless claims fell to 365,000 from the previous week's revised figure of 377,000. Economists had expected jobless claims to edge down to 370,000 from the 374,000 originally reported for the previous week.
Economic activity in the U.S. service sector grew for the 32nd consecutive month in August, according to a report released by the Institute for Supply Management on Thursday, with the pace of growth accelerating by more than anticipated.
The ISM said its non-manufacturing index rose to 53.7 in August from 52.6 in July, with a reading above 50 indicating an increase in activity in the service sector. Economists had been expecting the index to show a more modest increase to a reading of 53.0.
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