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Forex News: Dollar Down On Weak Durable Goods Orders

Dollar Down On Weak Durable Goods Orders

11/22/2017 - 14:20:00 (RTTNews)

(RTTNews) - The dollar is losing ground against all of its major rivals Wednesday afternoon. Traders were confronted with a trio of economic reports this morning. Weekly jobless claims and consumer sentiment were largely in line with expectations, while durable goods orders disappointed. Investors are also betting on a December rate hike following the release of the Fed minutes.

The Federal Reserve on Wednesday hinted that a rate hike is "likely" despite mounting concerns about low inflation.

Low inflation might also be a result of "developments that could prove more persistent," according to the minutes of the Fed's most recent meeting on Oct 31-Nov 1.

A number of officials are worried that a decline in longer-term inflation expectations would make it more challenging for the Committee to promote a return of inflation to 2 percent over the medium term.

On a brighter note, policy makers said labor market conditions generally continued to strengthen and that real gross domestic product expanded at a solid pace in the third quarter despite hurricane-related disruptions.

After reporting an unexpected increase in first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Wednesday showing a pullback in initial jobless claims in the week ended November 18th.

The report said initial jobless claims fell to 239,000, a decrease of 13,000 from the previous week's revised level of 252,000. Economists had expected jobless claims to drop to 240,000 from the 249,000 originally reported for the previous week.

Reflecting a sharp pullback in orders for transportation equipment, the Commerce Department released a report on Wednesday showing an unexpected drop in new orders for U.S. manufactured durable goods in the month of October.

The Commerce Department said durable goods orders tumbled by 1.2 percent in October after surging up by an upwardly revised 2.2 percent in September. The decrease surprised economists, who had expected orders to edge up by 0.3 percent compared to the 2.0 percent increase that had been reported for the previous month.

Consumer sentiment in the U.S. pulled back by less than initially estimated in the month of November, according to a report released by the University of Michigan on Wednesday. The report said the consumer sentiment index for November was upwardly revised to 98.5 from the preliminary estimate of 97.8. Economists had expected the index to be upwardly revised to 98.0.

The dollar has dropped to around $1.1815 against the Euro Wednesday afternoon, from an early high of $1.1734.

The UK government set aside an additional GBP 3 billion over the next two years to aid the process of the country's exit from the European Union and slashed the growth forecasts for the next few years mainly due to a significant downward revision to potential productivity growth.

"The negotiations on our future relationship with the EU are in a critical phase," Chancellor of the Exchequer Philip Hammond said in his Budget speech, the second in his term thus far.

"We have already invested almost GBP 700 million in Brexit preparations," he said. "And today I am setting aside over the next two years another GBP 3 billion."

The chancellor further said the government is ready to commit more sums if and when needed.

The buck has fallen to over a 2-week low of $1.33 against the pound sterling, from a high of $1.3209 this morning.

The greenback has tumbled to a 2-month low of Y111.330 against the Japanese Yen this afternoon, from an early high of Y112.351.

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