Forex - Greenback slammed on weak U.S. data

Investing.com - The U.S. dollar traded sharply lower against its rivals Thursday, after a string of tepid U.S. data underlined concerns over the outlook for the country’s economic recovery.

During U.S. afternoon trade, the dollar was down against the euro, with EUR/USD advancing 0.57% to 1.2360.

The greenback lost ground after official data showed that manufacturing activity in the Philadelphia-region remained in contraction territory for the fourth straight month in August.

The Federal Reserve Bank of Philadelphia said that its manufacturing index came in at minus 7.1 in August, from July’s reading of minus 12.9, missing expectations for a reading of minus 5.

The report came after data on Wednesday showing that a gauge of manufacturing activity in New York fell into contraction territory in August for the first time since October 2011.

Earlier Thursday, the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week rose to 366,000, a four-week high and slightly above expectations for an increase to 365,000.

In a separate report, the U.S. Commerce Department said housing starts fell by 1.1% in July to a seasonally adjusted 0.746 million last month, compared to expectations for a decline of 0.5% to 0.757 million.

However,  the number of building permits issued in July rose 6.8% to 0.812 million, compared to expectations for an increase of 1.2% to 0.770 million.

The reports sparked fresh speculation that the Federal Reserve may turn to fresh stimulus measures in the near future to shore up growth.

The flurry of data came after significantly stronger-than-expected U.S. retail sales numbers for July earlier in the week tempered expectations for another round of quantitative easing by the U.S. central bank.

The greenback was also lower against the pound, with GBP/USD rising 0.38% to 1.5743.

The pound erased early losses against the greenback after data showed that U.K. retail sales rose unexpectedly in July, indicating that the economy may not be as weak as feared.

The Office for National Statistics said U.K. retail sales rose by 0.3% in July, defying expectations for a 0.1% decline, while June’s numbers were revised up to a 0.8% gain from a previously reported increase of 0.1%.

Elsewhere, the greenback was higher against the yen, but dropped against the Swiss franc, with USD/JPY advancing 0.30% to 79.22 andUSD/CHF falling 0.58% to 0.9715.

In Switzerland, the ZEW Centre for European Economic Research said its index of economic sentiment hit a three-month high in August but remained in negative territory, coming in at minus 33.3, from a reading of minus 42.5 in July.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD slipping 0.11% to 0.9881,AUD/USD dipping 0.08% to 1.0496 and NZD/USD rising 0.25% to 0.8093.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.36% to 82.43.