The US dollar continued to be mixed in trading vs. most major currencies as investors await employment data due tomorrow. Initial jobless claims unexpectedly fell last week to the lowest level in more than a year. The claims declined by 5,000 to 457,000, much lower than forecast increase to 480,000. Continuing jobless claims continued to increase to 5,465,000 from 5,423,000. Productivity in the US climbed 8.1% in the 3rd quarter as labor costs fell 2.5%.
The euro strengthened against the dollar as European Central Bank President Trichet announced the first steps towards scaling back emergency stimulus lending. The ECB left interest rates unchanged at 1.0%, citing that there will be positive growth in 2010 while acknowledging hurdles still remain. Trichet also told reporters that the need for stimulus lending has diminished. Economic data released showed that Euro Zone gross domestic product grew 0.4% in the 3rd quarter, in line with expectations. Retail sales continued to decline in October, falling 1.9%, but beating forecasts of a 2.4% decline. The purchasing manager's composite index showed expansion with a 53.7 reading in November.
Sterling fell against the dollar as the UK purchasing manger's index for services was less than expected. The index had a reading of 56.6 in November, which is expansionary, but lower than forecast at 57.0.
The Japanese yen continued its decline against the dollar as investors grew cautious of possible currency intervention. Vice Finance Minister Rintaro Tamaki met with US Treasury officials this week in Washington, leading investors to believe solutions to tackling yen strength were discussed.
The Canadian dollar weakened against the dollar as commodity prices fell. Traders await Canada's employment report which is released tomorrow.
The Australian and New Zealand dollars climbed higher against the dollar even as commodity prices fell, helped by recent central bank moves to increase interest rates.
10-Year Treasury Note Yield: 3.3674%
Dow Jones Industrial Average: 10,448.60 -4.08