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Forex News: Dollar Paring Gains After Yesterday's Surge

Dollar Paring Gains After Yesterday's Surge

09/21/2017 - 15:11:00 (RTTNews)

(RTTNews) - The dollar is down against all of its major rivals Thursday afternoon, easing back from the sharp gains of the previous session. The buck surged yesterday afternoon following the release of the Federal Reserve's policy statement.

The Fed left interest rates unchanged yesterday, but signaled that another rate hike is likely this year. The Fed's projections pointed to a quarter basis point rate increase later this year, with the rate hike widely expected to come at the December meeting.

The central bank also revealed that it will begin shrinking its $4.5 trillion balance sheet in October, initially allowing $10 billion in bonds to roll off each month.

First-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 16th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims fell to 259,000, a decrease of 23,000 from the previous week's revised level of 282,000.

The continued decrease surprised economists, who had expected jobless claims to climb to 300,000 from the 284,000 originally reported for the previous week.

A report released by the Federal Reserve Bank of Philadelphia on Thursday showed an unexpected improvement in regional manufacturing conditions in the month of September. The Philly Fed said its index for current manufacturing activity rose to 23.8 in September from 18.9 in August, with a positive reading indicating growth. Economists had expected the index to drop to 17.2.

Reflecting large positive contributions from building permits, the yield spread, and consumer expectations, the Conference Board released a report on Thursday showing a bigger than expected increase by its index of leading U.S. economic indicators.

The Conference Board said its leading economic index climbed by 0.4 percent in August after rising by 0.3 percent in July. Economists had expected the index to edge up by 0.2 percent.

The dollar jumped to a high of around $1.1860 against the Euro after the Fed announcement yesterday, but has since retreated to around $1.1935.

Eurozone consumer confidence improved for a second straight month in September to its highest level since 2001, preliminary data from the European Commission showed Thursday.

The flash consumer confidence index rose to -1.2, marking the highest score since April 2001, when the reading was -0.9. Economists had expected the reading to remain unchanged at August's -1.5.

The buck reached an early high of $1.3470 against the pound sterling Thursday, but has since eased back to around $1.3575.

The UK budget deficit decreased to its lowest August level since 2007 on higher sales tax, official data revealed Thursday. Public sector net borrowing excluding interventions decreased by GBP 1.3 billion from the previous year to GBP 5.7 billion in August, the Office for National Statistics reported.

This was the lowest August borrowing since 2007. The deficit was also well below the expected level of GBP 7.1 billion.

The Bank of Japan maintained its monetary stimulus but a new member voted against the decision, as he demanded more easing, on Thursday.

The BoJ policy board, led by Governor Haruhiko Kuroda, voted 8-1 to hold the central bank's target of raising the amount of outstanding Japan government bond holdings at an annual pace of about JPY 80 trillion.

The BoJ board also voted to retain the -0.1 percent interest rate on current accounts that financial institutions maintain at the bank.

The central bank said it will purchase government bonds so that the yield of 10-year JGBs will remain at around zero percent.

The greenback climbed to a 2-month high of Y112.715 against the Japanese Yen Thursday, but has since slipped to around Y112.525.

Japan's all industry activity decreased slightly in July, after rebounding in the previous month, data from the Ministry of Economy, Trade and Industry showed Thursday. The all industry activity index dropped 0.1 percent month-on-month in July, reversing a 0.2 percent rise in June. The figure also matched consensus estimate.

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