The dollar is rebounding slightly from the sharp drop it suffered against all of its major competitors late Wednesday. The sharp decline in the U.S. currency was triggered by comments made by Federal Reserve Chairman Ben Bernanke Wednesday. Bernanke played down chances of imminent stimulus withdrawal while speaking at a conference sponsored by the National Bureau of Economic Research. He said the central bank would likely maintain its highly accommodative monetary policy “for the foreseeable future” as unemployment is still too high and inflation remains low.
The U.S. economy continued to improve at a moderate pace in the second quarter, the minutes of the June meeting of the Federal Reserve revealed Wednesday.
Officials at the central bank remain divided about when the economic recovery will be sufficient to taper their unprecedented support measures. Half of the Fed’s voting members say that QE should be scaled back by year’s end as long as the economy continues to heal.
First-time claims for U.S. unemployment benefits unexpectedly increased in the week ended July 6th, according to a report released by the Labor Department on Thursday, with claims rising to their highest level in almost two months.
The report said initial jobless claims rose to 360,000, an increase of 16,000 from the previous week’s revised figure of 344,000. The increase surprised economists, who had been expecting jobless claims to dip to 340,000 from the 343,000 originally reported for the previous week.
With a drop in non-fuel prices more than offsetting an increase in fuel prices, the Labor Department released a report on Thursday showing an unexpected decrease in U.S. import prices in the month of June. The Labor Department said import prices fell by 0.2 percent in June following a revised 0.7 percent decrease in May. Economists had been expecting import prices to inch up by 0.1 percent.
Additionally, the report said export prices edged down by 0.1 percent in June after dropping by 0.5 percent in the previous month. The drop in export prices matched economist estimates.
European Central Bank Governing Council member Jens Weidmann said Thursday that the central bank’s forward guidance on low interest rates will not deter it from hiking interest rates, if inflationary pressures emerge.
The ECB’s introduction of the forward guidance last week was justified by the current inflation outlook, Weidmann, who heads Germany’s Bundesbank, said in a speech in Munich.
The dollar plunged to a low of $1.3205 against the Euro Wednesday, its lowest level since June 20th, but has risen back to around $1.3050 on Thursday.
Eurozone house prices decreased at a faster rate in the first quarter, data released by Eurostat showed on Thursday. The house price index fell 2.2 percent year-on-year, following a 1.7 percent slump in the fourth quarter of 2012.
Germany’s whole sale prices increased modestly in June after falling for two months in a row, latest data from the Federal Statistical Office showed Thursday. The wholesale price index increased 0.7 percent on an annual basis in June, reversing decreases of 0.1 percent and 0.4 percent recorded in May and April. Economists were looking for an increase of 1 percent.
France’s inflation, as measured by the harmonized index of consumer prices or HICP, increased in June, but core inflation slipped to the lowest level in the series, data from statistical office Insee showed Thursday. The HICP increased 1 percent year-on-year in June, following a 0.9 percent rise in May and a 0.8 percent increase in April. The outcome was in line with expectations.
Unemployment rate in Greece rose to a new record high in April, with labor market conditions deteriorating further as the economy remained stuck in the longest recession in its history. The seasonally adjusted unemployment rate advanced to 26.9 percent in April from 26.8 percent in March and 26.6 percent in February, data released by the Hellenic Statistical Authority showed Thursday. The latest figure, which was the highest ever recorded, matched economists’ expectations.
The greenback dropped to a 4-session low of $1.5193 against the pound sterling on Wednesday, but has bounced back to around $1.5130 on Thursday.
The Bank of Japan on Thursday decided to keep its monetary easing program unchanged, while it upwardly revised its assessment of the economy citing signs of recovery. The nine-member policy board decided unanimously to keep the target of the monetary base expansion at an annual pace of JPY 60-70 trillion. The decision was in line with economists’ forecast.
The central bank said the economy is starting to recover moderately, upgrading its assessment from June when it said “the economy has been picking up.” The word “recover” was last used by the bank in January 2011, two months before the deadly earthquake and tsunami struck the island nation.
‘Exports have been picking up’ and ‘industrial production is increasing moderately’, the BoJ said.
At the same time, the central bank cut its inflation and growth forecasts slightly. The BoJ now expects gross domestic product to grow 2.8 percent in fiscal 2013, marginally lower than the April forecast of 2.9 percent.
The buck dropped to nearly a 2-week low of Y98.231, but has since risen back to around Y98.750 on Thursday.
Core machine orders jumped a seasonally adjusted 10.5 percent on month in May to 799.2 billion yen, the Cabinet Office said on Thursday, rising for the third time in four months. The headline figure blew away forecasts for an increase of 1.9 percent following the 8.8 percent plunge in April.