· The U.S. dollar rose on strong producer price and jobless-claims data on Thursday while sterling was weaker after news of a Brexit delay and the euro dinged by Wednesday’s European Central Bank statement.
The number of Americans filing initial applications for unemployment benefits dropped to a 49-1/2-year low last week, pointing to sustained labor market strength that could counter fears of a sharp slowdown in economic growth. Claims have declined for four straight weeks.
U.S. producer prices increased by the most in five months in March, the Labor Department reported, with its producer price index for final demand rising 0.6 percent in March, lifted by a surge in the cost of gasoline. Despite the top line increase, underlying wholesale inflation was tame.
· The dollar was trading higher “off the back of a very low jobless claims number and fairly robust PPI numbers. Overall what you’re seeing is a shift into dollars on fading expectations for a rate cut later this year,” said Karl Schamotta, director of foreign exchange strategy and structured products at Cambridge Global Payments.
· The dollar index was last up 0.22%, at 97.16, having retraced some of its earlier gains.
· The euro was modestly lower against the dollar after the European Central Bank hinted it was willing to leave interest rates alone amid trade tensions and signs of flagging growth. It was last down 0.15% at $1.1256.
· Sterling was 0.26% lower, last at $1.3055 after EU leaders extended the deadline for Britain to leave the European Union, suggesting fears remain about where Brexit is headed.
· Meanwhile, U.S. Federal Reserve Vice Chairman Richard Clarida told CNBC on Thursday that officials at the central bank see no necessity to move interest rates in either direction at present.
“One of the virtues of having the ability to be patient is that you just let the data come in,” he told CNBC on Thursday. “We don’t see a need now for a move in either direction.”
· There is too much debt floating around the world and China is a big reason why, World Bank President David Malpass said Thursday.
China has lent trillions of dollars to other countries, including the U.S. As of January, China owns $1.12 trillion in U.S. Treasurys, according to data from the Treasury Department.
Malpass has also criticized China for taking low-cost loans from the World Bank despite being the second largest economy in the world and surpassing the bank’s income threshold for low-cost loans in 2016.
· Oil prices fell on Thursday, after rising to five-month highs earlier this week on OPEC-led production cuts and free-falling Venezuelan output.
U.S. West Texas Intermediate crude oil futures settled $1.03 lower on Thursday, falling 1.6% to $63.58 per barrel. Earlier this week, WTI hit $64.79, its highest level since Nov. 1.
International benchmark Brent futures fell 90 cents, or 1.3%, at $70.83 a barrel. Brent hit a high going back to Nov. 12 at $71.78 on Wednesday.
· Selling accelerated Thursday morning as U.S. crude dropped below $63.71 a barrel, a technically-significant level at which some funds had stops in place, triggering automatic sales, said Bob Yawger, director of energy futures at Mizuho in New York.
Reference: CNBC, Reuters
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