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Higher yields give the Dollar a boost

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Higher yields give the Dollar a boost

The dollar gained ground initially against the Euro on Thursday as stronger than expected economic data pushed US yields to their highest levels in the past 24-months.  TIC data for the past month showed that investors were moving out of treasuries at accelerated rates.  Later in the session the currency pair turned with the Euro moving higher into the close.

The weekly jobless claims, along with the August Empire and Philly Fed surveys contain the most recent information on jobs and manufacturing.  Weakness in the Empire survey was evident in the new orders, though future expectations continue to rise.   The new orders component of the Philly Fed survey was cut in half printing at 5.3 versus 10.2 and prices paid fell showing that inflation continues to decline.

US treasuries yields climbed above 2.8% as investors headed for the exits. The US Department of the Treasury said on Thursday that net foreign sales of long-term securities totaled 66.9 billion in June, compared to net sales of 27 billion in May.  Expectations were for total purchases of 31.3 billion in June. Foreign residents shed holdings of long-term U.S. securities in June; net sales were 77.8 billion.

The combination of treasury selling and stronger than expected Initial jobless claims was positive for the greenback, but the currency gave back its gains into the close.  Jobless claims fell by 15,000 to 320,000 in the week ended Aug. 10, 2013, according to the Bureau of Labor statistics. The initial jobless claims number was the lowest level since October 2007.

The EURUSD currency pair pushed through resistance near the 10-day moving average at 1.33.  Support on the currency pair is seen near former resistance at 1.33.  Target resistance seen near 1.34.  Momentum is negative as the MACD (moving average convergence divergence) index generated a sell signal on Wednesday as the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread.

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