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Forex - EUR/USD gains as jobless claims exceed expectations

By Investing.comForexJan 31, 2013 06:00PM GMT Add a Comment
 
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Investing.com - The euro held onto a near 14-month high against the dollar on Thursday on reports that more Americans filed for unemployment benefits last week than anticipated.

Forex - EUR/USD gains as jobless claims exceed expectations
The dollar continued to move lower against the euro in wake of the Federal Reserve's announcement to make no changes to its loose monetary policies.

In U.S. trading on Thursday, EUR/USD was up 0.11% at 1.3580, up from a session low of 1.3541, and off from a high of 1.3594.

The pair was likely to find support at 1.3415, Tuesday's low, and resistance at 1.3614, the high from Nov. 18, 2011.

The euro held onto its gains against the dollar after the U.S. Department of Labor reported that the number of individuals filing for initial jobless benefits last week rose by 38,000 to 368,000, compared to expectations for an increase of 20,000 to 350,000.

Personal incomes in the U.S., meanwhile, jumped 2.6% in December, the largest increase in eight years.

The dollar continued to trade softer against the single currency after the Commerce Department reported on Wednesday that the U.S. gross domestic product contracted for the first time since the second quarter of 2009 in the three months ending December, shrinking by 0.1%.

Economists were forecasting growth of 1.1% after a 3.1% expansion in the preceding quarter.

A 6.6% decline in government spending and a significant drop in private inventories contributed to the contraction, which came with several silver linings.

The report added that consumer spending rose by 2.2% and business investment was 8.8% higher in the fourth quarter of last year.

Meanwhile, the Federal Reserve reported it was keeping interest rates near zero and sticking with its USD85 billion monthly bond-buying program, which weakens the dollar as a side effect.

The greenback did see support on U.S. Midwest manufacturing data.

Manufacturing activity in the Chicago-area expanded at a faster rate than expected in January, industry data showed on Thursday.

In a report, The Chicago purchasing managers’ index rose to a seasonally adjusted 55.6 in January from a revised reading of 50.0 in December.

Analysts had expected the index to improve to 50.5 in January.

On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Meanwhile in Europe, German retail sales fell 1.7% in December, their sharpest drop in more than three years.

Also in Germany the number of unemployed people in Germany fell by 16,000 in January, doubling market calls for a decline of 8,000 bringing the unemployment rate down to 6.8% from 6.9% in December.

The euro, meanwhile, was down against the pound and up against the yen, with EUR/GBP trading down 0.29% at 0.8561, and EUR/JPY trading up 0.39% at 124.06.

On Friday, the eurozone is to publish preliminary inflation data as well as official data on the unemployment rate.

The U.S. is to release the closely watched government report on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management is to publish a report on manufacturing activity.

In addition, the University of Michigan is to release revised data on consumer sentiment.








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