Daily Afternoon Report 05.10.2017

The dollar moved higher against other major currencies on Thursday, as the release of upbeat data added to optimism over the strength of the economy and comments from a Federal Reserve official boosted hopes for a December rate hike.

The greenback found support after the U.S. Department of Labor said initial jobless claims fell more than expected to 260,000 last week.

Another report showed that the U.S. trade deficit narrowed in August and that exports climbed to a two-and-a-half year high.

Separately, speaking at a conference in Austin, Texas, Philadelphia Fed Bank President Patrick Harker on Thursday said he is still planning on one more rate hike this year and three next year.

“I still have three rate hikes in for next year, but again we will have to see how the dynamics play out,” Harker said.

EURUSD slid 0.30% to 1.1727, while GBPUSD declined 0.78% to trade at 1.3139.

The euro weakened after the minutes of the European Central Bank’s September meeting showed that members remain concerned over the volatility of the single currency and some suggested that the economy may still need substantial stimulus for a little longer period of time.

The single currency was already fragile after the regional government of Catalonia announced on Wednesday that they will declare independence from Spain on Monday, adding to tensions in the region.

Meanwhile, USDJPY fell 0.27% to 112.45, while USDCHF added 0.19% to trade at 0.9770.

The Aussie and Kiwi remained weaker, with AUDUSD down 0.64% at 0.7813. while NZDUSD slumped 0.35% to 0.7143.

Earlier Thursday, the Australian Bureau of Statistics reported that retail sales declined 0.6% in August, confounding expectations for a 0.3% rise.

On a more positive note, another report showed that Australia’s trade surplus widened to A$989,000 in August from a revised surplus of A$808,000 the previous month. Analysts had expected the trade surplus to widen to only A$875,000 in August.

Meanwhile, USDCAD gained 0.42% to trade at 1.2531, re-approaching Tuesday’s one-month peak of 1.2540 after Statistics Canada said the country’s trade deficit widened to C$3.41 billion in August from C$2.98 billion the previous month.

Analysts had expected the trade deficit to narrow to C$2.60 billion in August.