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Dollar Weakening After Disappointing Economic Reports

February 12, 2015

Washington (Feb 12) )  The dollar is losing ground against all of its major competitors on Thursday after weekly jobless claims increased more than anticipated and retail sales fell further than expected. Investor optimism for a resolution to the Greek debt problem is also driving the Euro higher.

Continuing to rebound from a recent pullback, first-time claims for US unemployment benefits unexpectedly climbed back above the 300,000 level in the week ended  February 7th  .

 The Labor Department  released a report on Thursday showing that initial jobless claims climbed to 304,000, an increase of 25,000 from the previous week's revised level of 279,000. Economists had expected jobless claims to rise to 288,000 from the 278,000 originally reported for the previous week.

With sales by gas stations showing another substantial decrease, the  Commerce Department  released a report on Thursday showing that US retail sales fell by more than anticipated in the month of January. The report said retail sales fell by 0.8% in January after slumping by 0.9% in December. Economists had expected sales to drop by 0.5%.

Business inventories in the US saw a modest increase in the month of December, according to a report released by the  Commerce Department  on Thursday, although the report also showed a notable decrease in business sales.

The report said business inventories inched up by 0.1% in December after edging up by 0.2% in November. Economists had been expecting another 0.2% increase.

Eurozone finance ministers ended their talks on Wednesday without any major breakthrough on the future course of action on Greek debt funding.

"We had an intense discussion and constructive, covering a lot of ground, also making progress, but not enough progress at this point to come to joint conclusions,"  Eurogroup  President Jeroen Dijsselbloem said at the press conference in  Brussels  late Wednesday.

"We will also continue our talks on  Greece  and our current and future cooperation with  Greece  ," he said. "That is where we stand. So, there are no real conclusions, which I can share with you."

EU leaders are set to meet in  Brussels  today. Eurozone finance ministers will gather again on  February 16  .

The dollar dropped to a 4-day low of  USD1.1422  against the Euro Thursday, but has since risen back to around  USD1.1395  .

Eurozone industrial production remained flat in December after expanding for three consecutive months, data from Eurostat revealed Thursday.

Industrial production remained unchanged from November, while it was forecast to grow 0.2%. The growth rate for November was revised down to 0.1% from 0.2%.

 Germany's  consumer prices fell for the first time since  September 2009  in January and at a faster than initially estimated pace, final data from Destatis showed Thursday.

The consumer price index dropped 0.4% in January from last year, while it was estimated to fall by 0.3%. This was the first drop since  September 2009  and the biggest decline since  July 2009  , when prices slid 0.5%.

The Bank of  England  expects inflation to breach the 2% target in three years and economic growth to gain momentum. Although inflation is set to turn negative in the near term, the bank signaled an early rate hike than investors anticipate.

In the quarterly Inflation Report, released Thursday, the bank expressed readiness to take whatever action needed to ensure that inflation returns to the 2% target in a timely fashion. Any interest rate hikes would still be more gradual and limited, it said.

The BoE expects robust pace of growth seen in 2014 to be sustained in the near term. Gross domestic product is estimated to rise by 2.9% in 2015 and 2016. For 2017, the bank estimated 2.7% expansion.

The bank left 2015 GDP outlook unchanged from the previous forecast, but upgraded the outlook for 2016 from 2.6%.

The buck has plunged to over a 1-month low of  USD1.5399  against the pound sterling Thursday, from around  USD1.5200  this morning.

The average asking price for a house in the  UK  continued to increase in January, albeit at a slower pace, the latest survey from the  Royal Institution of Chartered Surveyors  showed on Thursday with a score of +7. That was down substantially from +12 in December, and it marked the slowest rate of growth since  May 2013  .

The greenback has pulled back to around  Y118.935  against the Japanese Yen Thursday, from over a 1-month high of  Y120.462  yesterday.

The leading index for  Japan  , which measures future economic conditions, decreased slightly in December, the results of a survey by the Conference Board showed Wednesday.  The Conference Board's  leading economic index for  Japan  fell 0.2% month-on-month in December, reversing some of the revised 0.6 increase in the previous month. It was the first decline in five months.

Core machine orders in  Japan  climbed 8.3% on month in December, the  Cabinet Office  said on Thursday. That topped expectations for an increase of 2.3% following the 1.3% gain in November.

An index measuring producer prices was down 1.3% on month in January, the  Bank of Japan  said on Thursday, showing a score of 103.3. That missed forecasts for a fall of 0.6% following the revised 0.5% decline in December.

Source: AllianceNews

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