The dollar turned higher against other currencies, after solid U.S. economic data sparked concerns that the Federal Reserve may raise interest rates in coming months.
The number of U.S. workers who applied for new unemployment benefits declined last week to the lowest level in 43 years, data from the Labor Department showed Thursday. Some traders believe the numbers are strong enough to warrant a rate increase from the Fed by June, a possibility that was considered less likely in recent weeks.
Expectations of higher rates tend to boost the dollar, as they make the currency more attractive to yield-seeking investors.
“U.S. data has actually been pretty good, and there is very little chance of a June move by the Fed priced in,” said Peter Gorra, head of FX trading at BNP Paribas in New York.”
The dollar move began around 9:30 a.m. ET, an hour after the jobless- claims data was released, toward the end of a news conference by European Central Bank President Mario Draghi.
The ECB decided to leave the central bank’s key interest rates and other stimulus programs unaltered, but said it stands ready to use “all instruments available,” including further cuts in all its interest rates to ensure the inflation rate returns to its target.
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