Dollar trades mixed on caution over Fed's policy, sterling falls on BoE's hawkish hold

The greenback traded mixed against its peers on Thursday as investors remained cautious about whether the Federal Reserve would alter its monetary policy anytime soon. Sterling fell across the board on the Bank of England's hawkish hold.  
  
According to Reuters, the U.S. economy is still far from maximum employment and it is not time to change interest rates, New York Federal Reserve Bank President John Williams said Thursday.    "Once the recovery is more complete and the economy is in a very good place, then we can take back the low interest rates and get them back to more normal levels," Williams said during a virtual conversation hosted by the College of Staten Island. "It's not the time now because the economy is still far from maximum employment."  Williams said the U.S. is still short about 7 million jobs from before the pandemic. He said the higher prices seen recently will not last, with inflation expected to come down to about 2% next year.  
  
Versus the Japanese yen, dollar briefly penetrated Wednesday's high at 111.10 to a fresh near 15-month peak at 111.11 in Asia, however, lack of follow-through buying triggered profit-taking and price fell to session lows at 110.70 in New York morning due partly to cross-buying in jpy. The pair then staged a rebound in tandem with US yields to 110.91 before stabilising.  
  
The single currency remained under pressure in Asia and edged lower to session lows at 1.1919 at European open before rising to an intra-day high at 1.1956 at New York open on cross-buying of euro especially vs sterling. The pair then pared its gains and retreated to 1.1921 in New York on a broad-based rebound in usd before trading sideways.  
  
The British pound went through hectic trading on Thursday as despite trading sideways inside a narrow range in Asia, price briefly gained to session highs at 1.3986 in European morning. However, price then tumbled ahead of New York open on Bank of England's dovish hold and hit session lows at 1.3889 in New York morning before rebounding to 1.3938 on short-covering.  
  
Reuters reported the Bank of England kept the size of its stimulus programme unchanged and left its benchmark interest rate at an all-time low of 0.1% on Thursday.    Economists taking part in a Reuters poll had expected no policy changes by the BoE as it waits to see if a post-lockdown jump in inflation proves transitory and whether unemployment rises when the government scales back its job-protection scheme.  The BoE said its Monetary Policy Committee voted 8-1 to keep its government bond-buying programme at 875 billion pounds ($1.22 trillion). The MPC voted 9-0 to keep Bank Rate unchanged and to leave its 20 billion pound stock of corporate bond purchases unchanged.  
  
On the data front, Reuters detailed that fewer Americans filed new claims for unemployment benefits last week as the labor market recovery from the COVID-19 pandemic gains traction amid a reopening economy, but a dearth of willing workers could hinder faster job growth in the near term.    Initial claims for state unemployment benefits fell 7,000 a seasonally adjusted 411,000 for the week ended June 19, the Labor Department said on Thursday. Applications increased in the prior week for the first time since late April, with economists attributing the rise to volatility in the aftermath of the May 31 Memorial Day holiday.    

In a separate report from the Commerce Department on Thursday confirmed economic growth accelerated in the first quarter, thanks to the massive fiscal stimulus.    Gross domestic product increased at a 6.4% annualized rate last quarter, the government said in its third estimate of growth for the first three months of the year. That was unrevised from the estimate published last month. The economy grew at a 4.3% rate in the fourth quarter.  
  
Data to be released on Friday:  
  
New Zealand import, trade balance, exports, U.K. Gfk consumer confidence, Japan Tokyo CPI, Germany Gfk consumer sentiment, Italy consumer confidence, trade balance, U.S. CBI distributive trades, personal income, personal spending, PCE prices and University of Michigan sentiment.