The dollar strengthened against its peers today remaining broadly higher following the release of solid US jobless claims figures as the greenback continued to be underpinned by the Federal Reserve’s decision to increase its benchmark interest rate for the first time yesterday in almost a decade. US jobless claims filed for last week dropped by 11,000 to total 271,000 while experts forecast a decline of 7,000 to total 275,000. The Federal Reserve Bank of Philadelphia revealed that its manufacturing index declined from a reading of 1.9 in November to -5.9 in December while experts forecast a decline to 1.5. These figures followed a day after the FOMC increased rates by 25 basis points to a range between 0.25% and 0.50%. Fed Chair Janet Yellen stated that depending on upcoming economic data releases rates could be gradually increased further. The US Dollar Index was up 0.58% trading at 98.97 reaching its highest level in 2 weeks.
The euro weakened against the dollar with the pair trading at its session low of 1.0802 off its session high of 1.0912. The euro was pressured to the downside as the dollar soared in response to the Fed’s rate hike. German research institute Ifo released data which revealed that its business climate index dropped from a reading of 109.0 in November to 108.7 in December while analysts expected the index to be unchanged.
The pound weakened against the dollar with the pair down 0.7% trading at 1.4882 off its session low of 1.4864 after having come off its session high of 1.5009 reached earlier in the day. The pound had regained lost ground following data released by the UK Office for National Statistics which revealed that retail sales rose by 1.7% in November surpassing expectations for an increase of 0.5%. Retail sales had declined by 0.5% in October. Retail sales on a year over year basis climbed 5.0% in November well beyond forecasts for an increase of 3.0% following an increase of 4.2% for October. Core retail sales surged by 1.7% in November beating expectations for a gain of 0.6% after a decrease of 0.8% in September.
The yen weakened against the dollar with the pair up 0.5% trading at its session high of 122.84 off its session low of 122.20 reached earlier in the day. The pair looks to be headed toward its 123 handle and should fundamentals allow it the dollar’s strength should be supported by the FOMC and Fed rate increase yesterday into the New Year while US stocks falter. The greenback has been on a roll gaining nearly 200 points against the yen over the past week. The Bank of Japan is scheduled to release it monthly monetary policy statement tomorrow.
The Australian, New Zealand and Canadian dollars weakened against the stronger greenback. The Aussie dropped 1.58% against the dollar with the pair trading at 0.7115 off its session low of 0.7096 after having come off its session high of 0.7247 reached earlier in the day. The kiwi dollar tanked 1.5% against the greenback with the pair trading at 0.6693 off its session low of 0.6687 after having come off its session high of 0.6803 reached earlier in the day. The loonie plummeted over 1% against the greenback with the pair trading at 1.3951 off its session high and 11 plus year peak of 1.3986. Commodity associated currencies were pressured lower as oil declined to 11 year lows amid global supply glut and dollar strength.
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