The dollar is gaining ground against the Japanese Yen on Thursday, after the Bank of Japan decided to maintain the massive stimulus program it launched in April. Meanwhile, the minutes from the most recent meeting of the FOMC released yesterday have investors concerned that the Federal Reserve will begin tapering its stimulus measures at one of its next meetings, if the U.S. economy continues to improve. The U.S. currency is losing ground against its major European competitors.
The Federal Reserve debated whether to mark a calendar date to end its massive bond-buying plan, according to minutes from the October meeting released Wednesday. At that meeting, the Fed kept its $85 billion per month plan in place.
The press release accompanying that decision gave practically no indication that the central bank will begin scaling back the asset purchases anytime soon, but today’s minutes suggest policy makers are crafting an exit plan.
“Many members” of the Federal Open Market Committee “stressed the data-dependent nature of the current asset purchase program, and some pointed out that, if economic conditions warranted, the committee could decide to slow the pace of purchases at one of its next few meetings,” the minutes read.
First-time claims for U.S. unemployment benefits fell by more than expected in the week ended November 16th, according to a report released by the Labor Department on Thursday, with claims falling to their lowest level in over a month.
The report said initial jobless claims dropped to 323,000, a decrease of 21,000 from the previous week’s revised figure of 344,000. Economists had been expecting initial jobless claims to dip to 335,000 from the 339,000 originally reported for the previous week.
Producer prices in the U.S. saw another modest decrease in the month of October, the Labor Department revealed in a report on Thursday, with the drop largely due to a steep decline in energy prices. The Labor Department said its producer price index dipped by 0.2 percent in October after edging down by 0.1 percent in September. The drop by the index matched economist estimates.
Growth in Philadelphia-area manufacturing activity has slowed by much more than anticipated in the month of November, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, with the index of activity in the sector falling to a six-month low.
The Philly Fed said its diffusion index of current activity tumbled to 6.5 in November from 19.8 in October. While a positive reading indicates continued growth in regional manufacturing activity, economists had expected a much more modest decrease to a reading of 15.5.
The Bank of Japan on Thursday decided to keep its massive stimulus program unchanged while also retaining its outlook of a moderate economic recovery.
At the end of a two-day meeting of the nine-member Policy Board, led by Governor Haruhiko Kuroda, the central bank said it will keep the target for the monetary base expansion at an annual pace of JPY 60-70 trillion.
Bank of Japan Governor Haruhiko Kuroda on Thursday reiterated that the central bank is prepared to ease its monetary policy again, if needed. The BoJ has enough room to adjust policy if the downside risks to the economy materialize, Kuroda said during a press conference held after the central bank’s policy meeting.
The dollar climbed to over a 4-month high of Y101.095 against the Japanese Yen on Thursday, from yesterday’s low of Y99.780.
European Central Bank President Mario Draghi on Thursday rejected media reports that the central bank is planning to take the deposit rate to negative territory.
“Let me plead with you – don’t try to infer from what I say today anything on the possibility of negative rates on the deposit facility,” Draghi said in a speech in Berlin.
“As I said at the press conference: this was discussed in the last monetary policy meeting and there are no news since then,” he said at the event organized by the German newspaper Suddeutsche Zeitung.
The greenback rose to a 1-week high of $1.3398 against the Euro early Thursday, but has since pulled back to around $1.3475.
Eurozone’s private sector growth weakened for the second straight month in November, defying expectations for a faster expansion, as a strong pick-up in Germany was offset by a renewed contraction in the French business activity. The slowdown raises concerns that the euro area economic recovery could lose pace in the fourth quarter.
The seasonally adjusted composite Purchasing Managers’ Index, which gauges performance of the manufacturing and service sectors, dropped to a three-month low of 51.5 in November from 51.9 in October, preliminary estimates released by Markit Economics showed Thursday. The index declined for the second month in a row. Economists had forecast a modest increase to 52.
German private sector business activity rose at the fastest pace in ten months in November, flash results of a survey by Markit Economics revealed Thursday. The composite output index, that measures business activity across both manufacturing and service sectors, rose to a ten-month high of 54.3 in November from 53.2 in October.
Activity in the French private sector decreased in November, after recording modest growth in the previous month, as both manufacturing and services activity fell sharply, survey data released by Markit Economics showed Thursday.
The seasonally adjusted composite output index, which gauges the performance of the manufacturing sector and the service sector, dropped to 48.5 in November from 50.5 in October.
The buck briefly touched an early high of $1.6071 against the pound sterling Thursday, but has since retreated to around $1.6160.
The U.K. budget deficit narrowed in October as the increase in tax receipts outpaced expenditure growth, the Office for National Statistics said Thursday. Public sector net borrowing excluding interventions fell slightly to GBP 8.1 billion in October from GBP 8.2 billion in the same period of last year. The deficit was forecast to fall to GBP 7.5 billion.