Forex Top Story

Greenback Falls Even As Jobless Claims Drop
7/16/2009 2:36 PM ET(RTTNews) - The dollar failed to make up much of this week's losses versus other majors on Thursday as traders expressed increased appetite for riskier, higher-yielding currencies following gains in equities markets.

With investors once again feeling an economic turnaround may be on the way following an abortive start earlier in the year, the dollar has fallen out of fashion among those looking to play the recovery.

On the jobs front, first time claims for unemployment benefits continued to decrease in the week ended July 11th, according to a report released by the Labor Department on Thursday, with initial jobless claims falling by more than economists had been expecting.

The report showed that jobless claims fell to 522,000 from the previous week's revised figure of 569,000. Economists had been expecting jobless claims to fall to about 530,000.

The dollar dropped to a 16-day low of 1.4165 in early dealing versus the euro Thursday morning. The pair has been unable to sustain much direction over the past few months amid alternating concerns about both US spending and European monetary policy.

Meanwhile, the dollar hit a 2-week low of 1.6479 versus the sterling, moving closer to June's 7-month low of 1.6744.

Elsewhere, the Bank of Japan raised its economic assessment for the third month, citing an increase in public investment and pick-ups in exports and production.

In its latest monthly report of recent economic and financial developments, the central bank said Japan's economic conditions have stopped worsening.

Still, the dollar was able to hold most of yesterday's gains versus the yen, staying near 93.50. Earlier in the week, the dollar hit a 5-month low of 91.87 before stabilizing.

The dollar was stable versus the loonie on Thursday, holding near 1.1200 after hitting a monthly low of 1.1113 during the previous session. Even with the price of oil stuck in the mud near $60 a barrel, the petro-linked loonie has gotten a boost from renewed faith in the Canadian economy.

Back in the US, the Federal Reserve Bank of Philadelphia released a report on Thursday showing that its index of activity in the manufacturing sector fell by more than economists had been expecting.

The Philly Fed said its index of current activity fell to a negative 7.5 in July from a negative 2.2 in June, with a negative reading indicating a contraction in the sector. The index had been expected to slip to a reading of negative 4.8.

by RTT Staff Writer

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