Dollar retreats on recent round of weak US data; sterling, euro gain

A staff member counts money at a branch of Industrial and Commercial Bank of China on August 10, 2011 in China.
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The dollar fell for a fifth straight session on Thursday, undermined by a recent slew of weaker-than-expected U.S. economic data and this week's robust performance by the euro and the British pound.

The Federal Reserve, at its last monetary policy meeting, said it was on hold after cutting interest rates three times this year. But some analysts suggested that the Fed may have to reconsider that stance if U.S. economic data continues to underwhelm going forward.

"You're looking at concerns that the U.S. economy is yet again slowing down just based on some poor numbers out of both ISM (Institute for Supply Management) numbers," said Joe Trevisani, senior analyst at "I don't think we'll get a weak number though on payrolls on Friday, which is the next big data, but until you get a good number on manufacturing, and here we go again with the U.S.-China trade problem, there's always going to be concern that the U.S. economy is not going to fulfill its potential," he added.

Most currencies traded in tight ranges after turmoil induced by conflicting headlines on the fate of a preliminary U.S.-China trade deal and the lack of clarity on whether any kind of agreement can be reached before Dec. 15, when additional U.S. tariffs kick in on Chinese goods.

But focus was also on how much damage the trade war is causing and whether the signs of economic stabilization seen in the euro zone and Chinese data can continue. German industrial orders fell unexpectedly in October, data showed on Thursday.

U.S. reports on Thursday such as weekly jobless claims and the trade deficit were mostly better than expected, but they are second-tier data that has little bearing on the Fed's monetary policy action. The trade deficit dropped to its lowest level in nearly 1-1/2 years in October to $47.2 billion, the smallest since May 2018. Initial claims for state unemployment benefits, on the other hand, dropped 10,000 to a seasonally adjusted 203,000 for the week ended Nov. 30, the lowest level since mid-April.

That data followed Wednesday's dismal figures on private payrolls and services activity, and Monday's poor U.S. manufacturing activity index and construction spending figures. Meanwhile, manufacturing activity in the euro zone beat expectations.

The dollar index was down 0.26% at 97.39. The euro rose 0.2% versus the dollar to $1.1086, while the dollar slipped 0.1% against the yen to 108.78 yen.

Sterling is this week's best performer, up more than 1.5% this week to the dollar, as it appears likely that the ruling Conservative Party will win a majority in next week's election and end 3-1/2 years of Brexit-related uncertainty by taking Britain out of the European Union.

The British pound traded at a new seven-month high of $1.3146 and extended gains against the euro to a new 2-1/2-year high of 84.31 pence The pound was last up 0.3% versus the dollar at $1.3138.