Dollar Shakes Off Mixed U.S. Economic Data to Trade Higher
The dollar traded higher against its rivals Thursday, shrugging off a mixed economic data as traders continue to bet a stronger U.S. economy would underpin the greenback amid lingering trade-war tensions.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.32% to 95.27.
The U.S. Department of Labor reported Thursday that initial jobless claims dropped by 6,000 to a seasonally-adjusted 213,000 for the week ended Aug. 3, beating economists’ forecast for a rise to 220,000.
The Labor Department said on Wednesday its producer price index for final demand was flat last month after rising 0.3% in June. In the 12 months through August, the PPI rose 3.3%, compared with expectations for a 3.4% rise.
Analysts downplayed the weaker-than-expected data and blamed the slowdown in wholesale prices on the volatile trade services component.
The trade-services component did most of the damage, which was a story of softness in fuels, lubricants and machinery, RBC said.
"If we strip out trade services from core, it would have been up 0.3%," the bank added.
The dollar remained supported, however, on expectations that U.S. would fare better in a trade war than China as the U.S. economy is less dependent on exports.
“You have rising income, rising labor participation, rising confidence, and all of that consumer spending accounts for two thirds of our (U.S.) GDP,” said Scott Clemons, chief investment strategist for Brown Brothers Harriman in New York last week. “Our starting position is much stronger than the Chinese because trade doesn’t matter as much to the American economy.”
The dollar was also supported by slump in the euro and weakness in the pound.
EUR/USD fell 0.44% to $1.1559. while GBP/USD fell 0.23% to $1.2851 as fears of a no-deal Brexit continued to weigh.
USD/CAD rose 0.22% to C$1.3051 while USD/JPY fell 0.05% to Y110.98.