Dollar Turns In Mixed Performance Against Peers

The U.S. Dollar swung between gains and losses against other major currencies on Thursday, reacting to U.S. inflation data and the European Central Bank’s monetary policy statement.

With the Federal Reserve’s policy announcement due next Wednesday, traders were a bit cautious.

Data released by the Labor Department showed a bigger than expected increase in consumer prices in the month of May. The data said the U.S. consumer price index rose by 0.6% in May after climbing by 0.8% in April. Economists had expected consumer prices to increase by 0.4%.

The report also showed consumer prices in May were up by 5% compared to the same month a year ago, reflecting the biggest spike since August of 2008. The annual rate of core consumer price growth also accelerated to 3.8% in May, which represents the biggest jump since June of 1992.

Another data from the Labor Department showed a modest drop in first-time claims for unemployment benefits in the U.S. The report said jobless claims dipped to 376,000 from the previous week’s unrevised level of 385,000. Economists had expected jobless claims to fall to 370,000.

The dollar index, which hit a high of 90.31 post release of the inflation data, swiftly fell to 89.98, and despite briefly rebounding above the flat line, faltered again. It was last seen at 90.04, down nearly 0.1% from the previous close.

Against the Euro, the dollar weakened to $1.2195, easing from $1.2145, but recovered to $1.2176. The Governing Council of the European Central Bank today left key interest rates unchanged and maintained the size of the pandemic emergency purchase programme, or PEPP, at EUR 1,850 billion.

The ECB has raised Eurozone growth forecasts for this year and next and said the risks to the outlook were balanced. Policymakers also raised the inflation forecast for the two years, but expect underlying inflationary pressures to remain subdued.

The Pound Sterling strengthened against the dollar, fetching $1.4177 a unit, more than 0.4% up from Wednesday’s close.

The Yen was firmer by 0.3% at 109.32 a dollar, compared to 109.64 on Wednesday.

Against the Aussie, the dollar slipped to 0.7754, from 0.7731.

The Swiss franc was slightly weak against the dollar at CHF 0.8957, easing from CHF 0.8948.

The Loonie strengthened from C$ 1.2111 to C$ 1.2097 as oil prices moved higher.

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