The US dollar weakened against a basket of currencies on Thursday, driven by a slowing national economy in the fourth quarter and a bump in jobless claims in the last week. The greenbackâs losses were capped by a positive business barometer that suggested renewed activity.
According to the Bureau of Economic Analysis (BEA), the gross domestic product (GDP) advanced at a 2.6% annual pace in the October-to-December period, beating market forecasts of 1.9%. While fourth-quarter GDP was higher than median estimates, economic growth was slower compared to the 3.4% in Q3 and 4.2% in Q2.
The slump stemmed from a widening trade deficit, a slower housing market, and the partial US government shutdown. But consumers and businesses came to the rescue and helped contribute to the 2.6% clip in Q3. Consumer spending rose 2.8% as Americans spent more on automobiles, financial assistance, and healthcare. Businesses invested more than expected on equipment, product research, and infrastructure.
Overall, the disappointing economic report shows that the positive effects of the GOP tax cuts were fading and the trade tensions with China are still having a greater impact on both the US and global economies.
On Thursday, the Department of Labor reported that the number of people who applied for jobless benefits climbed in the week ending February 23, though they still hover near their lowest levels in decades. The US government reported that jobless claims rose by 8,000 to 225,000, matching what the market penciled in.
The four-week average of new jobless claims tumbled by 7,000 to 229,000 per week, while the number of people collecting unemployment benefits jumped by 79,000 to 1.81 million.
In February, the Chicago Purchasing Manager Index (PMI) rose eight points to a reading of 64.7, the biggest monthly gain in two years â anything over 50 shows improving market conditions. The boost in PMI was driven by new orders, a component that surged 15.2 points.
The USD/CAD currency pair jumped 0.06% to 1.3165, from an opening of 1.3156, at 15:55 GMT on Thursday. The EUR/CAD climbed 0.12% to 1.1384, from an opening of 1.1371.
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