News Column

Dollar Advances After Unexpected Decline In US Weekly Jobless Claims

July 24, 2014

OTTAWA (Alliance News) - The US dollar climbed against its major counterparts in early New York deals on Thursday, following a report showing an unexpected fall in weekly jobless claims to more than an eight year low.

The report from the Labor Department showed that the US initial jobless claims slid to 284,000, a decrease of 19,000 from the previous week's revised level of 303,000. The drop surprised economists, who had expected jobless claims to climb to 308,000 from the 302,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 283,000 in the week ended February 18, 2006.

Recovering from an early low of 101.41 against the yen, the greenback advanced to an 8-day high of 101.77. The greenback is likely to test resistance around the 102.5 zone. The greenback-yen pair was valued at 101.46 at yesterday's close.

Japan saw a merchandise trade deficit of822.2 billion yen in June, the Ministry of Finance said. That missed forecasts for a shortfall of 642.9 billion yen following the 910.8 billion yen deficit in May.

The greenback bounced off from an early 2-day low of 0.9007 against the Swiss currency, with pair trading at 0.9024. The greenback is thus short of few pips from its early 5-1/2-month high of 0.9037. Next key upside target for the greenback is seen around the 0.91 level.

The greenback staged a moderate rebound against the euro and was trading at 1.3464, up from an early 2-day low of 1.3484. The greenback is thus heading to break its early 8-1/2-month high of 1.3437. If the greenback extends gain, 1.34 is seen as its next possible upside target level.

The Eurozone private sector growth rebounded in July from a six-month low, flash survey data from Markit Economics showed.

The flash composite output index rose to 54 in July from 52.8 in June. The services PMI climbed unexpectedly to a 38-month high of 54.4.

Extending early rally, the greenback strengthened to a 4-week high of 1.6991 versus the Sterling, off early low of 1.7052. The next possible upside target for the greenback is seen around the 1.69 region.

UK retail sales increased marginally in June as food sales recovered from the prior month, data from the Office for National Statistics showed.

Retail sales including auto fuel rose 0.1% in June from May, when it dropped 0.5%. Sales were expected to grow by 0.3%.

The greenback recouped some of its early losses against the loonie with pair trading at 1.0734. This may be compared to an early low of 1.0717. The greenback is likely to find resistance around the 1.08 mark.

Looking ahead, US new home sales for June and Markit's flash manufacturing PMI for July are due shortly.

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Source: Alliance News

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