He dollar index rose on Thursday fifth consecutive sessionafter data from American labor market that showed a growth in employment, which allowed us to reinforce the idea that there will be an interest rate cut by the Federal Reserve.
Initial jobless claims fell by 16,000 to a seasonally adjusted 187,000in the week ending January 13, its lowest since September 2022, the Department of Labor reported, below the 207,000 claims expected by economists consulted by Reuters.
“The market is doing what it loves most: getting people out of crowded positions. Since the beginning of the year, everything has turned around,” said Erik Bregar of Silver Gold Bull in Toronto. “Central banks backed off on rate cuts for 2024 and overall economic data has been better than expected”.
The dollar index, which compares the greenback with a basket of six major currencies, gained 0.14% to 103.47 units, after reaching 103.69 units on Wednesday for the first time since December 13. It recorded its fifth consecutive session higher, its longest streak since August.
Expectations of a cut of at least 25 basis points by the Fed in March are at 57.1%according to CME’s FedWatch tool, down from 55.5% the previous session and a decline from 73.2% a week ago.
This week, Fed officials such as Governor Christopher Waller pushed back against expectations for an aggressive round of rate cuts, suggesting the speed and timing will be slower than the market had initially anticipated. Atlanta Fed President Raphael Bostic is scheduled to speak later in the day.
The dollar was stable against its Japanese pair, at 148.14 yen, after rising to 148.52 on Wednesday, its highest level since November 28. The Bank of Japan will hold a monetary policy meeting on Monday and Tuesday next week.
The euro fell 0.14% to $1.0866 after the European Central Bank’s December meeting minutes showed that its authorities seemed quite confident that inflation was returning to its target, although they saw risks that still justified a constant policy and high borrowing costs.