US Dollar reveres losses against major currencies
Frankfurt (Apr 30) The greenback reversed earlier losses to trade higher against a basket of currencies on Thursday amid the release of numerous U.S. economic data points.
The dollar index traded up 0.12 percent at 95.31 after trading below 95 earlier in the session. The dollar traded 0.37 percent higher against the yen at 119.46, but remained 0.28 percent lower against the euro at $1.1148.
The number of Americans filing new claims for unemployment benefits last week dropped to the lowest level since 2000, suggesting March's moderation in job growth was likely an aberration. Meanwhile, U.S. labor costs rose solidly in the first quarter as wages in the private sector increased, which could keep the Federal Reserve on track to raise interest rates this year.
In a separate report, U.S. consumer spending rose in March as households stepped up purchases of durable goods, suggesting the economy was regaining some momentum after almost screeching to a halt in the first quarter.
Earlier, the euro pushed above $1.12 for the first time in two months on growing concern over the U.S. economy's prospects.
With signs it will hold off on more monetary easing for the moment, the Bank of Japan also added to trend. The yen rose to its strongest in a month.
The euro, up more than 6 percent against the dollar since April 13, pushed to a two-month high of $1.12485 in morning trade in Europe. It was most recently at $1.1163, up 0.44 percent.
A low reading of U.S. first quarter growth capped a poor run of economy numbers on Wednesday and the Federal Reserve's policy meeting was also seen confirming it will hold off again with any interest rate rise.
The scenario that has driven the dollar higher over the past year, that the United States is ready for a first rise in rates in almost a decade, is not yet dead. But with other major economies struggling, there are growing doubts.
"We still see this as a correction to the dollar's rise over the last year but near term it probably has further to run. A move up into the $1.15 area is definitely not out of the question," said Ian Stannard, head of European FX strategy at Morgan Stanley in London
"It will need some strong data surprises in favour of the dollar to turn this around."
The Bank of Japan, whose steady campaign of money printing has knocked more than a fifth off the value of the yen in two years, held off with another round of easing on Thursday and insisted it was confident inflation would begin to rise. That prodded the yen to as high as 118.50 in early trade in Europe.
"They have cut their inflation forecast but they still expect inflation to start rising in the second half of the year," said Manuel Oliveri, a strategist with Credit Agricole in London. "That says to me that monetary policy expectations remain stable and yen should hold in a range going forward."
The Russian ruble shed about 1.5 percent against the dollar on Thursday after the Russian central bank cut its interest rates by 150 basis points to 12.5 percent. The ruble last stood at 51.46 against the greenback.
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