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Dollar Set for Sixth Monthly Drop Before Jobless Claims

Dollar Set for Sixth Monthly Drop Before Jobless Claims

The Dollar headed for a sixth monthly loss versus the euro before a U.S. report that economists said will show jobless claims increased, validating the Federal Reserve’s decision to maintain asset purchases. The U.S. currency dropped toward a 13-month low against the euro. U.S. applications for jobless benefits rose by 21,000 to 351,000 last week, according to a Bloomberg News survey before today’s Labor Department report. The jobless rate was unchanged at 7.8 percent in January, a separate survey showed before the data is released tomorrow. Unemployment has stayed at that level or higher since January 2009.

Meanwhile, European data on Wednesday showed economic sentiment improved for a third straight month, a sign the euro zone is emerging from a low point and diminishing the chance of a rate cut from the European Central Bank.News last week about euro zone banks’ early repayments of three-year loans to the European Central Bank was seen as a sign that parts of the euro zone banking system may be on the mend.

On the FX markets, the combination of disappointing US GDP data plus improved sentiment in the eurozone help EUR/USD consolidate above the key $1.35 barrier to a 14month high of $1.3587. GBP/USD was also able to recover lost ground and broke back through the $1.58 level.

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