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Forex News: Dollar Sinks After Mnuchin Comments

Dollar Sinks After Mnuchin Comments

01/24/2018 - 14:57:00 (RTTNews)

(RTTNews) - The dollar is down sharply against all of its major rivals Wednesday afternoon. The currency weakened following the release of a batch of strong European economic data and comments from Treasury Secretary Steven Mnuchin. At the World Economic Forum in Davos, Mnuchin said a weaker greenback "is good for us as it related to trade and opportunities."

Existing home sales in the U.S. pulled back by more than anticipated in the month of December, according to a report released by the National Association of Realtors on Wednesday. NAR said existing home sales tumbled by 3.6 percent to an annual rate of 5.57 million in December after jumping by 5.1 percent to a revised 5.78 million in November.

Economists had expected existing home sales to drop to a rate of 5.70 million from the 5.81 million originally reported for the previous month.

Traders are also looking forward to tomorrow's policy decision from the European Central Bank. ECB President Mario Draghi is likely to ignore the hawkishness surrounding the robust euro area economy to signal a dovish stance on Thursday. Traders will be keeping a close eye on the wording of the forward guidance after policymakers agreed in December to 'revisit' it early this year.

The dollar has dropped to over a 3-year low of $1.24 against the Euro Wednesday afternoon, from an early high of $1.2288.

Eurozone private sector activity expanded at the fastest pace in nearly 12 years in January driven by an acceleration in the service sector, flash data from IHS Markit showed Wednesday.

The composite output index rose unexpectedly to 58.6 from 58.1 in December. The expected reading was 57.9. This was the highest since June 2006.

Germany's private sector activity maintained growth momentum in January, flash survey results from IHS Markit showed Wednesday.

The composite output index dropped slightly to 58.8 from December's 80-month high of 58.9. The expected reading was 58.5.

France's private sector strengthened in January largely driven by services activity, flash survey data from IHS Markit showed Wednesday.

The composite output index came in at 59.7 in January. The score was broadly unchanged from the prior survey period and only just shy of November's six-and-a-half year peak of 60.3. The expected score was 59.2.

The buck has tumbled to an 18-month low of $1.4215 against the pound sterling this afternoon, from an early high of $1.3999.

The UK unemployment rate held steady at the lowest level in 42 years in November and employment rose to a record, reflecting a resilient labor market.

The jobless rate was 4.3 percent in the three months to November, the same rate as in the quarter to August, data from the Office for National Statistics showed Wednesday. This was the joint lowest figure since 1975.

At the same time, the employment rate rose to 75.3 percent from 74.5 percent a year ago. The rate was the joint highest since records began in 1971. The number of employed increased by 102,000 from August to a record 32.21 million.

The greenback has fallen to a 4-month low of Y109.050 against the Japanese Yen this afternoon, from a high of Y110.295 this morning.

The manufacturing sector in Japan continued to expand in January, and at an accelerated rate, the latest survey from Nikkei revealed on Wednesday with a manufacturing PMI score of 54.4. That's up from 54.0 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Japan posted a merchandise trade surplus of 358.971 billion yen in December, the Ministry of Finance said on Wednesday, down 43.5 percent on year. The headline figure was shy of expectations for a surplus 520.0 billion yen following the 113.4 billion yen surplus in November.

Japan's leading index climbed less than estimated in November but remained at the highest level in nearly four years, final data from the Cabinet Office showed Wednesday. The leading index, which measures the future economic activity, rose to 108.3 in November from 106.5 in October.

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