The Euro was unable to make a fresh challenge on levels above the 1.2370 level against the dollar during Thursday and retreated back to 1.2285 before regaining the 1.23 level in cautious and choppy trading. Dollar sentiment remains weaker, but the impact is being offset by the continuing pressure for a Euro correction after rapid gains this week.
US jobless claims fell to 303,000 in the latest week from 313,000 previously, arresting the slight deterioration seen over the past few weeks. The Philadelphia Fed survey increased slightly to 13.2 in April from 12.3 the previous month. Individual components showed considerable volatility as orders growth fell while there were sharp gains for the employment and prices paid sub-indices. The growth indicators should be broadly neutral for the dollar.
Markets wile main on alert for official exchange rate comments ahead of this weekend’s IMF and G7 meetings. From a longer-term perspective, there will be calls for dollar depreciation, but caution is likely given the recent deterioration in dollar sentiment as G7 will not want to promote unstable markets. European officials may also take the opportunity to talk down the Euro given recent gains. Any aggressive calls for a weaker dollar would weaken the US currency sharply.
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