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Forex - Dollar slumps on mixed U.S. pricing data

Published 08/15/2013, 03:18 PM
Updated 08/15/2013, 03:19 PM

Investing.com - The dollar softened against most major currencies on Thursday after U.S. industrial output and regional manufacturing barometers missed expectations and watered down better-than-expected consumer pricing and jobless reports.

The combo convinced many investors that the Federal Reserve will keep stimulus tools in place likely through December instead of September.

Stimulus tools such as the Fed's USD85 billion monthly bond-buying program weaken the dollar to spur recovery.

In U.S. trading on Thursday, EUR/USD was up 0.71% at 1.3351.

The Department of Labor reported earlier that weekly jobless claims in the U.S. fell to their lowest level since January 2008 last week, dropping by 15,000 to 320,000.

The Department of Labor also revealed that the U.S. consumer price index rose 0.2% in July from June and 2.0% from July of last year, in line with analysts' forecasts.

The core consumer price index, which is stripped of volatile food and energy costs, also rose 0.2% in July from June and 1.7% on year, also matching consensus forecasts.

The data reinforced views held by many the economic recovery may be strong enough to prompt the U.S. Federal Reserve to announce plans to taper its monthly USD85 billion bond-buying program this year, though soft output data dampened recent expectations for tapering to begin at the Fed's September meeting.

U.S. industrial production came in flat in July, according to the Federal Reserve, missing expectations for a 0.3% increase.

A separate Federal Reserve report revealed that manufacturing activity in the Philadelphia-region of the U.S. expanded at its slowest pace in four months in August, while manufacturing activity in New York state fell unexpectedly.

The Philadelphia Fed Manufacturing Index fell to 9.3 in August from 19.8 in July, falling far short of market forecasts for a 15.0 reading.

The Federal Reserve's New York Empire State Manufacturing Index fell to 8.24 in August from 9.46 in July, defying expectations for a gain to 10.00.

The data prompted many to trade on expectations that the Fed will put off tapering asset purchases until December and keep the dollar weak via monthly liquidity injections until then.

The greenback, meanwhile, was down against the pound, with GBP/USD up 0.94% at 1.5646.

The pound firmed after the Office for National Statistics reported that U.K. retail sales climbed 1.1% in July from June, far outpacing expectations for a 0.6% gain after a 0.2% increase in June.

Retail sales rose 3.0% on year, beating expectations for a 2.5% gain after rising at an annual rate of 1.9% in June.

Core retail sales, which exclude automobile sales, rose 1.1% in July from June, above forecasts for a 0.6% gain, after increasing 0.3% in the preceding month.

The dollar was down against the yen, with USD/JPY down 0.79% at 97.35, and down against the Swiss franc, with USD/CHF trading down 1.07% at 0.9256.

The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.35% at 1.0304, AUD/USD up 0.18% at 0.9138 and NZD/USD trading up 0.64% at 0.8079.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.71% at 81.18.

On Friday, the U.S. will release data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts. The University of Michigan is to release its closely watched preliminary data on consumer sentiment.








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