Dollar drops sharply due to increase in unemployment claims

Dollar drops sharply due to increase in unemployment claims

The US dollar index reached the level of 104.9, to become at the highest level in 20 years, and increases its rise, after data that showed an increase in unemployment claims.

Dollar drops sharply due to increase

Gold is now down 1.50% to $1,825 an ounce.

The US dollar strengthened in early European trade on Thursday to a new two-decade high after US inflation remained stubbornly high, while Sterling weakened on the back of disappointing UK growth data.

At 3:10 AM ET (07:10 GMT), the dollar index, which measures the greenback against a basket of six other currencies, rose 0.3% to 104.162, having previously climbed to 104.243, its highest level. Since December 2002.

Data released on Wednesday showed that the US consumer price index rose 8.3% year-on-year in April, down from 8.5% in March but still higher than the 8.1% overall expected.

While this figure indicates that inflation may have peaked in the US, it has remained consistently high which means that the Fed's current monetary policy plans to aggressively raise interest rates in the coming months will remain unchanged.

Also, the entire market is priced at at least a half percentage point increase in the policy rate in each of the next two Federal Reserve decisions, on June 15 and July 27.

"The rhetoric from the Federal Reserve remains very hawkish," analysts at ING said in a note. "The message seems to be that the policy rate should be taken to neutral ASAP, and then the Fed will see if it needs to tighten further (not less)."

EURUSD also rose to 1.0514, staying above the five-year low of 1.0469 seen at the end of last month, buoyed by rising expectations that the European Central Bank will raise interest rates this summer, for the first time in more than a decade.

ECB Executive Board member Isabel Schnabel was the latest policymaker to voice concerns about the high level of inflation in the eurozone, saying the central bank must respond, even if the drivers of inflation that have driven it to record levels are inherently global.

While USDJPY fell 0.5% to 129.25, with the yen benefiting from a decline in long-term Treasury yields, with the 10-year yield falling to a two-week low of 2.848% on Thursday from multi-year highs. above 3.2%. At the beginning of the week.

In addition, GBPUSD fell 0.3% to 1.2210, falling to its lowest level in almost two years after data showed that the British economy grew less than expected in the first quarter, weighed down by the rising cost of living crisis.

Gross domestic product grew just 0.8% in seasonally adjusted terms from the fourth quarter, with preliminary data indicating that it actually declined in March by 0.1%. Analysts had expected 1.0% growth for the quarter, and a recession in March.

Elsewhere, the US dollar against the Chinese yuan rose 0.7% to 6.7673, after Deputy Bank Governor Chen Yulu said earlier on Thursday that China's central bank is making stabilizing economic growth a top priority, indicating a more supportive monetary policy going forward. ahead.