By Saumya Vaishampayan, MarketWatch
NEW YORK (MarketWatch) -- The dollar fell against the euro
Thursday as investors weighed the prospects of additional stimulus
from the European Central Bank with guesses on when the Federal
Reserve could begin raising rates.
Jobless claims edged up by 2,000 to 304,000 in the week ended
April 12, remaining near their lowest level since 2007. Economists
had expected claims to hit 315,000, according to a MarketWatch
survey.
Manufacturing in the Philadelphia area picked up in April, with
the Philly Fed diffusion index rising to 16.6 from 9.0 in March.
The 16.6 reading was the highest since September and beat
expectations.
Federal Reserve Chairwoman Janet Yellen on Wednesday said a
strong U.S. economy that meets the Fed's employment and inflation
goals could be achieved by the end of 2016, showing "how far we
have to go" before the recovery takes root. Recap: Live blog and
video of Janet Yellen's speech and Q&A
The euro (EURUSD) rose to $1.3838 from $1.3815 late Wednesday.
Producer prices in Germany fell 0.9% in March from a year earlier,
notching a bigger decline than had been expected and the latest
data report to highlight the weak level of inflation in the euro
zone. Continued levels of low inflation could threaten the European
Central Bank's medium-term inflation outlook and has led to
speculation that the ECB could be forced to ease further.
The euro hasn't fallen significantly against the dollar despite
comments from ECB officials about how the high exchange rate has
further depressed inflation. The euro hit a 2014 high above $1.39
in March, marking the highest level since late 2011, according to
FactSet. And continued dovish rhetoric from Yellen has weighed on
the dollar, said Kathleen Brooks, research director at Forex.com,
in a note.
The ICE dollar index (DXY), which pits the dollar against six
rivals, has fallen nearly 6% since its peak in July, even as the
Fed began reducing its monetary stimulus, she said. In recent
trade, the index fell to 72.711 from 79.827 late Wednesday.
"If EURUSD continues to hover around 1.40 and the Fed sticks to
its current message then the ECB may have to unleash the big guns
in the form of negative deposit rates, or QE, to weaken the EUR
once and for all," Brooks said in a note. "Ultimately, it could be
the Fed, rather than weak inflation, that may force the ECB to
embark on radical policy measures in the near term," she added.
The WSJ Dollar Index , an alternative gauge that measures the
dollar against more rivals, moved lower to 72.90 from 72.98.
The dollar (USDJPY) fell to Yen102.15 from Yen102.24 late
Wednesday. Japan downgraded its view on the economy on Thursday,
spurred by a decline in consumer spending that was visible after
the sale-tax hike went into effect April 1.
In other trade, the Australian dollar (AUDUSD) fell to 93.45
U.S. cents from 93.71 U.S. cents late Wednesday. The British pound
(GBPUSD) edged up to $1.6809 from $1.6797.
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