Dollar Struggles as Post-Fed Rally Fades
The dollar fell against a basket of major currencies as the post-Fed rally faded despite a duo of economic reports showing manufacturing and labor market activity topped expectations
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.22% to 92.02.
The bullish manufacturing report beat forecasts for a reading of 18 amid economists' expectations that disruption due to Hurricane Harvey would dent national manufacturing.
The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 23.8, a three-month high, from 18.9 in August.
Meanwhile, initial jobless claims decreased by 23,000 to 259,000 in the week ended Sept. 16, beating forecasts of a 18,000 decline, the U.S. Department of Labor reported Thursday.
The negative session for the greenback comes a day after it made strong gains following a somewhat hawkish Federal Reserve statement which stoked expectations for a year-end rate hike.
The "dot plot," part of the FOMC's Summary of Economic Projections, indicated that the central bank saw rates rising to between 1.25% and 1.5% by the end of the 2017. With rates steady at 1-1.25%, that points to one further rate hike this year.
The majority of traders - more than 70% - expect the rate hike in December, according toInvesting.com's fed rate monitor tool.
Losses in the greenback were limited, however, as the yen weakened in the wake of the Bank of Japan’s overnight decision to leave interest rates unchanged.
Sterling, meanwhile, added to earlier gains against the greenback rising 0.66% to $1.2583 as market participants look ahead to a key speech from British Prime Minister Theresa May on Brexit slated for Friday.