The US dollar declined against the euro on Thursday as investors anticipated the announcement of the new Federal Reserve Chair. The greenback failed to climb despite positive data releases today, which showed strong nonfarm productivity and fewer applications for unemployment benefits.
US President Donald Trump is expected to announce his nomination for the new Federal Reserve Chair later today. Most traders expect the president to name Jerome Powell, who is a member of the Federal Reserve Governing Board, as the next chairman of the central bank.
If Trump chose Powell, it would signal continuity of the current policy, which is implemented by Federal Reserve Chairwoman Janet Yellen. The current policy follows a careful pace towards higher interest rates. Powell will probably follow the footsteps of Yellen after serving with her over her term, which makes him a safe pick to extend the current monetary policy.
Anticipation for the Republican tax bill ended today as leaders of the party announced a plan to cut corporate and middle class taxes. The US currency responded negatively to the bill announcement as most of its positive aspects had already been leaked, while bad news within the bill, like the removal of some tax credits, only came in today.
On the economic front, the US Bureau of Labor Statistics stated in a report that was published today that nonfarm productivity rose 3.0% in the third quarter of 2017. The increase compared to a gain by 1.5% in the second quarter and beat estimates of a 2.4% gain.
Higher output and more working hours contributed to the overall productivity increase. Meanwhile, the unit labor costs matched estimates at 0.5% in the third quarter following an increase by 0.3% in the second quarter.
The US Department of Labor published its weekly update for unemployment insurance claims, showing that there were 229,000 applications in the week ending October 28. The seasonally adjusted data was 5,000 claims lower than the previous weekâs revised level.
Sequentially, the average for four weeks dropped to 232,500, which marked the lowest level since April 1973. However, the positive data failed to lift the US dollar higher.
EUR/USD traded at 1.1667 at 14:35 GMT on Thursday after rising to 1.1683, the pairâs highest level since October 26. EUR/USD began trading today at 1.1635. USD/JPY was at 113.83 after falling to 113.60 at 13:10 GMT, the lowest level for the day. USD/JPY was at 113.99 when the day started.
The Dollar Index, which tracks the performance of the US currency against a basket of its major peers, fell to 94.61 as of 14:31 today from 94.81 yesterday.
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