Dollar Nosedives As Stocks Fight Back Thursday

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The dollar plunged in afternoon dealing versus the other majors after US stocks stormed back from early losses, fueling increased risk appetite.

Stocks slumped in early dealing, but rallied on light volume, led by financials. The price of oil soared as the dollar weakened.

The buck fell off a cliff versus the euro, plunging to a 3-week low of 1.4405. With the loss, the dollar wiped out this week's gains and moved within a whisker of its 8-month low of 1.4446, set earlier in August.

The buck also hit the skids versus the sterling, dropping to 1.6286 from a 6-week high of 1.6152. Even with the loss, the dollar stayed well away from August 3's 10-month low of 1.7012.

Versus the yen, the buck dropped to a monthly low of 93.20, continuing a steady downtrend.

With oil rising back above $72 a barrel, the dollar dropped more than a cent to C$1.0840 versus the petro-linked loonie.

In economic news, the Commerce Department released its second estimate of gross domestic product in the second quarter, showing that the pace of decline in economic activity was unrevised from the advance estimate.

The report showed that GDP decreased at an annual rate of 1.0 percent in the second quarter, unchanged from the 1.0 percent decrease originally reported in late July. Economists had been expecting GDP to be revised to show a decrease of 1.5 percent.

Also, the number of people filing for first-time unemployment benefits edged down last week, according to a report released by the Labor Department on Thursday, although jobless claims remain at a relatively high level.

The Labor Department said that initial jobless claims edged down to 570,000 in the week ended August 22nd from the previous week's revised figure of 580,000.

Germany's Federal Statistical Office said in a preliminary report that the consumer price index or CPI remained unchanged on an annual basis in August, compared with a 0.5% fall in the previous month. Economists were looking for a decline of 2%.

UK retail sales fell for the fourth month in a row in August, but retailers are no longer feeling so pessimistic about the outlook for their business situation in the coming months, the latest distributive trades survey by the Confederation of British Industry revealed Thursday.

(Market News Provided by RTTNews)