(Reuters) – The dollar extended losses on Thursday after data showed that U.S. jobless claims rose more than expected in the latest week, though the market was generally viewed as consolidating ahead of key inflation data and the Federal Reserve’s interest rate decision next week.
Initial claims for state unemployment benefits jumped 28,000 to a seasonally adjusted 261,000 for the week ended June 3, the Labor Department said on Thursday. Economists polled by Reuters had forecast 235,000 claims for the latest week.
“Claims (were) a bit higher than expected,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, but “we’re still in a consolidation mode … right now we’re just trapped.”
The greenback has been bolstered by expectations that the Federal Reserve will hike rates in July, though it is widely expected to pause hikes at the conclusion of its June 13-14 meeting.
But worsening economic data may also limit how many further rate increases the U.S. central bank is able to achieve even if inflation pressures remain high.
“There is a small window of opportunity for the Fed to raise rates again, whether it’s June or July, and the market now favors July … the market doesn’t think there’s anything more to be done because the economy looks set to weaken,” said Chandler.
The euro was last up 0.57% against the dollar at $1.0759. The single currency gained despite data showing that the euro zone economy was in a technical recession in the first three months of 2023.
The greenback fell 0.70% to 139.15 yen.
The dollar index, which measures the currency against six major peers, was down 0.48% to 103.53. Last week the index hit 104.7, the highest since March 15.
The Canadian loonie was slightly stronger after the Bank of Canada surprised traders on Wednesday by raising interest rates to 4.75%, a 22-year high. The greenback was last down 0.10% at C$1.3355.
The Australian dollar also gained after the Reserve Bank of Australia on Tuesday raised the cash rate to an 11-year high of 4.1%. It was up 0.75% at $0.6703.
The European Central Bank is expected to raise rates by 25 basis points (bp) when it meets next Thursday, to be followed by another 25 bp increase in July, taking rates to 3.75%.
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Currency bid prices at 9:40AM (1340 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 103.5300 104.0400 -0.48% 0.039% +104.0700 +103.5100
Euro/Dollar $1.0759 $1.0699 +0.57% +0.42% +$1.0763 +$1.0698
Dollar/Yen 139.1500 140.1600 -0.70% +6.16% +140.2250 +139.1300
Euro/Yen 149.70 149.93 -0.15% +6.70% +150.0400 +149.6000
Dollar/Swiss 0.9016 0.9102 -0.93% -2.48% +0.9107 +0.9014
Sterling/Dollar $1.2513 $1.2439 +0.59% +3.46% +$1.2516 +$1.2438
Dollar/Canadian 1.3355 1.3371 -0.10% -1.42% +1.3375 +1.3334
Aussie/Dollar $0.6703 $0.6653 +0.75% -1.67% +$0.6707 +$0.6652
Euro/Swiss 0.9702 0.9736 -0.35% -1.95% +0.9761 +0.9696
Euro/Sterling 0.8598 0.8599 -0.01% -2.78% +0.8613 +0.8594
NZ $0.6087 $0.6037 +0.86% -4.11% +$0.6092 +$0.6033
Dollar/Dollar
Dollar/Norway 10.9270 11.0490 -1.01% +11.44% +11.0530 +10.9170
Euro/Norway 11.7529 11.7972 -0.38% +12.00% +11.8355 +11.7370
Dollar/Sweden 10.8258 10.8872 -0.09% +4.02% +10.9009 +10.8241
Euro/Sweden 11.6436 11.6545 -0.09% +4.43% +11.6860 +11.6281
