Dollar Losing Ground On Weak Economic Data

The dollar got off to a positive start Thursday, but has since turned lower against all of its major rivals. Investors were treated to a trio of U.S. economic reports this morning. While traders were encouraged by better than expected weekly jobless claims data, housing starts and the Philly Fed index were disappointments.

First-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended January 13th, according to a report released by the Labor Department on Thursday. The report said initial jobless claims fell to 220,000, a decrease of 41,000 from the previous week's unrevised level of 261,000. Economists had expected jobless claims to dip to 250,000.

A report released by the Commerce Department on Thursday showed a steep drop in new residential construction in the U.S. in the month of December. The report said housing starts tumbled by 8.2 percent to an annual rate of 1.192 million in December from the revised November estimate of 1.299 million.

Economists had expected housing starts to drop to a rate of 1.275 million from the 1.297 million originally reported for the previous month.

Building permits, an indicator of future housing demand, edged down by 0.1 percent to a rate of 1.302 million in December from a revised 1.303 million in November. Economists had been expecting building permits to drop to a rate of 1.290 million from the 1.298 million originally reported for the previous month.

Growth in activity in the Philadelphia-area manufacturing sector slowed by more than anticipated in the month of January, the Federal Reserve Bank of Philadelphia revealed in a report on Thursday. The Philly Fed said its index for current manufacturing activity in the region slid to 22.2 in January from a revised 27.9 in December, although a positive reading still indicates growth.

Economists had expected the Philly Fed index to dip to 25.0 from the 26.2 originally reported for the previous month.

The dollar has dropped to around $1.2245 against the Euro Thursday afternoon, from an early high of $1.2172.

The buck has fallen to around $1.3890 this afternoon, from an early high of $1.3803.

The greenback rose to a high of Y111.481 against the Japanese Yen Thursday morning, but has since retreated to around Y111.025.

Japan's industrial production increased less than initially estimated in November, latest figures from the Ministry of Economy, Trade and Industry showed Thursday. Industrial production rose at a stable rate of 0.5 percent month-over-month in November, just below the 0.6 percent increase reported earlier.