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Dollar Higher as ECB's Draghi Sends Euro Down

2018-7-27 10:08:47Basics of Trading
Dollar Higher as ECB's Draghi Sends Euro Down

The U.S. dollar rose against its rivals Thursday. A rout of the euro prompted traders to buy the greenback after European Central Bank President Mario Draghi reiterated that rates would remain on hold until next year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.46% to 94.41.

Draghi said Thursday that there was no need to "modify or add new language" to the bank's forward guidance on rates and reaffirmed plans to keep rates unchanged “through the summer of 2019.”

Draghi added that market expectations of rate hikes were "very well aligned" with the bank's own projections.

That all but confirmed investor expectations that ECB is unlikely to hike interest until October 2019, pressuring the euro to drop against the greenback.

EUR/USD fell 0.54% to $1.1665.

A trio of reports showing weak U.S. economic data did little to limit the greenback's advance as investors remained optimistic on domestic economic growth ahead of second-quarter GDP data due Friday.

The Commerce Department said on Wednesday core durable goods orders rose 0.4% last month, missing economists' forecast for a 0.5%.

The U.S. Department of Labor, meanwhile, reported Thursday that initial jobless claims increased by 9,000 to a seasonally adjusted 217,000 for the week ended July 21, missing economists’ forecast for a drop to 215,000.

The goods trade deficit -- which measures the gap between what the United States imports and what it exports -- widened to $68.33 billion in June.

The greenback was also supported by a slump in the pound as Brexit-related angst continued to weigh.

GBP/USD fell 0.48% to $1.3127. The pair remains well above the lows seen last week, when it dropped below $1.30.

USD/JPY rose 0.16% to Y111.16, while USD/CAD rose 0.09% to C$1.3059.