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Dollar Rebounds From Early Weakness, Scores Solid Gains Against Peers

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The U.S. dollar gained against most of its major counterparts on Thursday after European Central Bank chief Christine Lagarde avoided saying exactly when the bank would raise interest rates.

The ECB today left its interest rates unchanged and confirmed that it will end net asset purchases under its asset purchase programme in the thir quarter. However, it did not give an exact date, citing incoming data since the March policy session.

“Looking ahead, our monetary policy will depend on the incoming data and our evolving assessment of the outlook,” Lagarde said in her introductory statement to the post-decision press conference, which this time was a live virtual session from her home as she is recovering from a Covid-19 infection.

“In the current conditions of high uncertainty, we will maintain optionality, gradualism and flexibility in the conduct of monetary policy.”

The ECB chief noted that several factors signal slow growth in the period ahead and the downside risks to the growth outlook in the euro area have increased substantially due to the war in Ukraine.

Meanwhile, in U.S. economic news, data released by the Commerce Department showed retail sales rose by 0.5% in March after climbing by an upwardly revised 0.8% in February. Economists had expected retail sales to increase by 0.6% compared to the 0.3% uptick originally reported for the previous month.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits increased by more than expected in the week ended April 9th, rising to 185,000, an increase of 18,000 from the previous week’s revised level of 167,000.

The Labor Department also released a report showing U.S. import prices surged by more than expected in the month of March, as prices for fuel imports continued to skyrocket.

Meanwhile, preliminary data released by the University of Michigan showed the consumer sentiment index spiked to 65.7 in April from 59.4 in March. The sharp increase surprised economists, who had expected the index to edge down to 59.0.

The consumer sentiment index rebounded from its lowest level since August 2011 amid an improvement in consumer expectations, with the expectations index surging to 64.1 in April from 54.3 in Mach.

The dollar index, which was down in the Asian session, climbed to 100.76 post release of the latest batch of economic data. Despite paring some gains subsequently, the index remains firm at 100.31, up 0.44% from the previous close.

Against the Euro, the dollar firmed to $1.0831 from $1.0892.

The dollar is trading at $1.3078 against Pound Sterling, strengthening from $1.3117.

Against the Japanese currency, the dollar is stronger, fetching 125.95 yen a unit, compared with 125.66 yen on Wednesday.

The dollar is at 0.7417 against the Aussie, firming from 0.7455. The Swiss franc is trading at 0.9428 a dollar, weakening from 0.9346.

The Loonie is weak at C$ 1.2610 a dollar, about 0.36% down from the previous close of C$ 1.2565.

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