The greenback surrendered its initial losses made in Asia and Europe on return of risk sentiment and ended the day little changed against majority of its peers on Thursday as investors remained cautious about when the Federal Reserve would begin tapering its asset purchases as well as the timing of interest rate hikes.
Reuters reported the number of Americans filing new claims for unemployment benefits fell close to a 19-month low last week, further evidence that a shortage of workers was behind slower job growth rather than weakening demand for labor. Initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 293,000 for the week ended Oct. 9. That was lowest level since mid-March 2020. Economists polled by Reuters had forecast 316,000 claims for the latest week.
Versus the Japanese yen, dollar found renewed buying at 113.22 in Australia and gained to 113.59 ahead of European open before retreating to 113.29 in European morning. The pair then rose to session highs of 113.71 in New York morning on active cross-selling in jpy before stabilising.
On Thurs being detailed by Reuters on San Francisco Federal Reserve Bank President Mary Daly, that inflation and employment had made enough progress for the U.S. central bank to begin dialing down its monthly bond buying, but is far from ready for interest rate hikes. "At this point it is premature to start talking about rate increases," Daly said in an interview on CNN International. Current high inflation stems from COVID-related supply chain shocks and will subside when infections do, she said. "If we would pull back our accommodation for the economy...I would wager a bet that it won't solve the supply-chain bottlenecks," she said.
The single currency retreated from 1.1600 at Asian open and retreated to 1.1587 ahead of European open, however, the pair found renewed buying there and rose to session highs at 1.1624 in European morning. The pair then erased its gains and fell to an intra-day low of 1.1585 in New York morning due partly to cross-selling in euro especially vs sterling.
The British pound traded sideways in Asia before jumping to an near 3-week high at 1.3734 in European morning on active cross-buying in sterling especially vs euro. However, lack of follow-through buying triggered profit-taking and the pair retreated to 1.3668 due to a broad-based rebound in usd.
In other news, Reuters said that the Bank of England can hold off on raising interest rates because investors are tightening monetary conditions by betting on future rate hikes in Britain and the United States, BoE interest rate-setter Catherine Mann said. "This means that there's a lot of endogenous tightening of financial conditions already in train in the UK. That means that I can wait on active tightening through a Bank Rate rise," she said on Thursday.
Data to be released on Friday:
New Zealand manufacturing PMI, China retail sales, Japan tertiary industry activities, Germany wholesale price index, France CPI, Italy CPI, trade balance, EU trade balance, U.S. NY Fed manufacturing, import prices, export prices, retail sales, business inventories, University of Michigan Sentiment and Canada wholesale trade.
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