Dollar steadies, euro little changed
The dollar steadied against a basket of the other major currencies on Thursday a day after dovish comments from Federal Reserve Chair Janet Yellen, while the euro was little changed amid speculation over the European Central Bank's expected wind-down of stimulus.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.57 by 10.59 AM ET, not far from the nine-month low of 95.22 plumbed in late June.
In testimony before Congress on Wednesday, Yellen said the economy is on a strong enough footing for the Fed to raise rates and begin winding down its massive bond portfolio.
She also emphasized that inflation is below target and noted that it is a particular “uncertainty” that could affect monetary policy.
Yellen was giving a second day of testimony on Thursday.
Meanwhile, data on Thursday showed that the number of Americans filing new claims for unemployment benefits fell last week for the first time in a month.
Initial jobless claims fell to 247,000 last week, from 250,000, indicating that the labor market remains robust.
A separate report showed that U.S. producer prices unexpectedly rose in June.
Signs of strength in the labor market and an uptick in inflation could help reinforce expectations for a third rate hike by the Fed this year.
Investors were looking ahead to Friday’s U.S. inflation figures for June for their potential impact on Fed policy.
The dollar pushed higher against the yen, with USD/JPY rising 0.24% to 113.39 after falling to a one-week low of 112.87 overnight.
The euro was steady, with EUR/USD at 1.1406 after falling to intra-day lows of 1.1371.
The euro found support following a report in The Wall Street Journal that the ECB is likely to indicate in September that its quantitative easing program will be wound down next year.
Sterling was higher, with GBP/USD advancing 0.39% to 1.2933.
The pound received a boost after Bank of England policymaker Ian McCafferty said the bank should rethink its current policy of not unwinding its huge quantitative easing program until interest rates have risen close to more normal levels.
The greenback was touch lower against the Canadian dollar, with USD/CAD at 1.2737, not far from the 13-month low of 1.2679 set on Wednesday after the Bank of Canada hiked interest rates.
Other commodity linked currencies were also higher, with AUD/USD last up 0.57% to 0.7724 and NZD/USD putting on 0.83% to 0.7319 boosted by the release of stronger-than-expected Chinese trade data for June.