2020.01.0220:32:00UTC+00Dollar Rebounds From Six-month Lows, Gains Against Peers

The U.S. dollar turned in a fine performance against its peers on Thursday, rebounding smartly from six-month lows touched on the final session of 2019.

Downbeat economic data from Euro zone, with Germany and France seeing a contraction in manufacturing activity, and disappointing data out of the U.K. weighed on Euro and Pound Sterling.

Meanwhile, data showing an unexpected drop in first-time claims for U.S. unemployment benefits supported the dollar. The report from the Labor Department showed initial jobless claims slipped to 222,000 in the week ended December 28th, a decrease of 2,000 from the previous week's revised level of 224,000.

Economists had expected jobless claims to inch up to 225,000 from the 222,000 originally reported for the previous week.

The dollar index, which had settled at 96.39 on Tuesday, rose to 96.80 in mid morning and despite dropping to around 96.50 subsequently, recovered to 96.87 as the session progressed. It was last seen at 96.84, up nearly 0.5% from previous close.

Against the Euro, the dollar was trading at $1.1172, up 0.8% from Tuesday's close of $1.1265. The euro area manufacturing sector continued to contract in December with weakness spread across most of the member countries, final data from IHS Markit showed Thursday.

The manufacturing Purchasing Managers' Index fell to 46.3 in December from 46.9 in November. However, the score was above the flash reading of 45.9. The PMI reading has remained below the 50 no-change level for the eleventh consecutive month.

France's final factory Purchasing Mangers' Index fell to 50.4 in December from 51.7 in November, while Germany's IHS Markit/BME manufacturing Purchasing Managers' Index declined to 43.7 in December from a five-month high of 44.1 in November.

The Pound Sterling eased to $1.3116 before recovering some lost ground and edging up to $1.3143, still down by a sharp 0.81%.

Data from IHS Markit showed the UK manufacturing sector shrank in December as output contracted at the fastest pace since July 2012. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index fell to 47.5 in December.

Against the Japanese Yen, the dollar pared early gains and was at 108.55 yen, compared with Tuesday's close of 108.76 yen.

The dollar gained more than 0.4% against the Aussie with the AUD-USD pair quoting at 0.6988.

Against Swiss franc, the dollar was up notably at 0.9714, and against the Loonie, it was up marginally at 1.2990.

On the trade front, U.S. President Donald Trump said earlier this week that the phase one trade deal between the U.S. and china is due to be signed during a White House ceremony on January 15th. He also posted on Twitter a couple of days ago that he would travel to Beijing at a later date to begin talks on phase two of a trade agreement.

Recent reports have indicated Chinese Vice Premier Liu He, Beijing's top trade negotiator, will be on hand to sign the phase one deal this month.