The dollar slid against major currencies in patchy trade on Thursday as a slew of data continued to show the US economy slowing on the back of multiple sizeable rate hikes by the Federal Reserve, and the market He anticipated a pause in tightening this year.
The yen, on the other hand, rallied against the dollar as traders continued to bet that the Bank of Japan (BOJ) will eventually move away from ultra-loose monetary policy.
Data on Thursday showed US home starts overall declined 1.4% to a rate of 1.382 million units last month. Building permits also fell, 1.6% at a rate of 1,330 million units.
THE US DOLLAR CAN NO LONGER BE THE GLOBAL RESERVE CURRENCY: GORDON CHANG
Manufacturing activity in the Mid-Atlantic region softened again in January. The Philadelphia Fed’s monthly manufacturing index rose to negative 8.9 this month from negative 13.7 in December, a larger improvement than economists had expected in a Reuters poll. The median estimate was 11 negatives.
General conditions were rated the least negative in three months in a survey of goods producers that also showed inflationary pressures – measured by the price paid index – fell to 24.5 in January from 36.3 last month. That was the lowest in almost two and a half years.
However, initial claims for state unemployment benefits fell 15,000 to a seasonally adjusted 190,000 for the week ending Jan. 14. Economists polled by Reuters had forecast 214,000 applications for the past week.
Edward Moya, senior market analyst at OANDA in New York, said the economy is clearly weakening.
“The housing market is in a recession and you’ll get these regional Fed surveys that are weak and show that business activity is struggling,” he said.
“But the initial jobless claims report reinforces that this labor market remains strong. The labor market needs to break down for inflation to continue coming down,” he added.
The value of the US dollar depreciated on Thursday, while the Japanese yen made notable gains.
(REUTERS/Shohei Miyano)
In morning trade, the dollar fell 0.4% against the yen to 128.475 yen, a day after the BOJ’s decision to maintain its ultra-loose monetary policy.
The yen’s rally also “reflects the fact that market participants continue to speculate (about) a change in Bank of Japan policy,” Carol Kong, a currency strategist at Commonwealth Bank of Australia, said of the yen’s rise on Thursday.
The euro was last trading against the dollar at $1.0806. It hit a nine-month high of $1,089 on Wednesday before paring gains.
European Central Bank President Christine Lagarde said on Thursday that inflation is too high and the ECB will continue to raise interest rates.
“We will stay the course until such time as we have moved into restrictive territory long enough that we can bring inflation back to 2% in a timely manner,” he told a panel discussion during the World Economic Forum in Davos, Switzerland. .
RUSSIANS ESTABLISH METHOD TO CONVERT ELECTRONIC CURRENCY INTO CHINESE YUAN, DESPITE FEAR OF ALLIANCE
The dollar index, which measures the US currency against a basket of peers, was flat at 102.28 for the last time.
Sterling was slightly lower at $1.2344, after falling from the previous session’s one-month high of $1.244.
The Australian dollar slumped 0.6% to US$0.69, further pressured by a surprise drop in Australian employment in December.
Meanwhile, the New Zealand dollar lost 0.9% to settle at US$0.6389.
CLICK HERE TO GET THE FOX NEWS APP
New Zealand Prime Minister Jacinda Ardern made a shock announcement Thursday that she would resign no later than early February and would not seek re-election.
