Forexpros – The U.S. dollar was mixed against its major counterparts on Thursday, as weak U.S. manufacturing data sparked fresh concerns over the U.S. economic recovery, but greenback demand remained supported amid fears over the debt crisis in the euro zone.
During U.S. morning trade, the dollar was hovering close to a four-month high against the euro, with EUR/USD dipping 0.05% to hit 1.2710.
The euro retreated from the session low after the Federal Reserve Bank of Philadelphia said that it’s manufacturing index dropped by 14.3 points to minus 5.8 in May from the previous months reading of 8.5.
Analysts had expected the index to rise by 1.5 points to 10.0 in May.
On Wednesday, the minutes of the Federal Reserve’s last meeting indicated that several policymakers remain open to further efforts to stimulate the U.S. economy if growth falters or if the risks to the economy increase.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week held steady at a seasonally adjusted 370,000, confounding expectations for a decline of 5,000 to 365,000.
The euro fell to a four-month trough against the greenback earlier amid speculation that rating’s agency Moody’s was preparing to announce widespread downgrades on Spain’s troubled banking sector.
Spain successfully auctioned EUR2.5 billion of government bonds on Thursday, but the country’s borrowing costs rose sharply, pressured higher by worries over the health of the country’s banking sector.
Meanwhile, fears over the implications of a Greek exit from the euro zone continued as the country prepared for fresh elections next month, which could see anti-austerity parties take power.
The greenback was higher against the pound, with GBP/USD falling 0.63% to hit 1.5810.
The pound remained broadly weaker after Wednesday’s Bank of England inflation report revised down growth forecasts and warned of the risk to the U.K. economy from the crisis in the euro zone, fuelling speculation over a fresh round of easing measures from the central bank.
Elsewhere, the greenback was sharply lower against the yen, but was little changed against the Swiss franc, with USD/JPY tumbling 0.88% to hit 79.62 and USD/CHF inching down 0.01% to hit 0.9446.
In Japan, official data showed that gross domestic product expanded 1.0% in the three months to March, exceeding expectations for a 0.9% increase, following a flat reading in the previous quarter.
The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.36% to hit 1.0156, AUD/USD up 0.29% to hit 0.9940 and NZD/USD climbing 0.23% to hit 0.7658.
The Canadian dollar was little changed earlier after official data showed that Canadian wholesale sales rose 0.4% in March, broadly in line with expectations, led higher by increased output in the domestic auto sector.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dipped 0.08%, to trade at 81.58.
Also Thursday, the Confidence Board’s index of leading U.S. economic indicators fell in April, down for the first time in seven months.
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