Dollar Steadies on Upbeat Inflation Data, Shrugs off GBP/USD Spike
The dollar rose against a basket of major currencies on Thursday after a duo of upbeat economic reports on wholesale inflation and jobless claims lifted investor expectations for a solid-quarter economic growth.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.14% to 92.92.
The U.S. Department of Labor reported Thursday that initial jobless claims fell 15,000 to a seasonally adjusted 258,000 for the week ended Oct. 7, beating forecasts of a 7,000 decline.
In a separate report, the U.S. Department of Labor said its producer price index for final demand increased 0.4% in September. In the 12 months through September, the PPI rose 2.2% after rising 2% in August.
The bullish wholesale data comes ahead of U.S. retail inflation data - measured by the consumer price index - slated for Friday, easing concerns over the slowdown in inflation in the wake of Federal Reserve minutes of its September meeting.
The Federal Reserve minutes showed Fed members were increasingly concerned that the slowdown in inflation may not as transitory as anticipated.
St. Louis Fed President James Bullard warned on Thursday that the central bank should stop raising rates until the pace of inflation improves.
"If you are going to have an inflation target you should defend it. If you say you are going to hit the inflation target then you should try to hit it and maintain credibility," Bullard said in an interview with Reuters.
That, however, had little impact on investor expectations of a December rate hike.
According to Investing.com’s fed rate monitor tool nearly 90% of traders expect the Fed to hikes rate in June compared to just 80% in the previous week.
Also adding to dollar strength was a retreat in the euro amid ongoing political uncertainty in the region after Spanish Prime Minister Mariano Rajoy gave the Catalan government eight days to abandon its independence bid.
EUR/USD fell 0.15% to $1.1840, while eur/gbp lost 0.48% to £0.8927.