The U.S. dollar exhibited strength against most of its peers on Thursday amid rising Treasury yields following an upward revision in GDP and inflation forecasts by the Federal Reserve.
The Fed said on Wednesday that it expects the economy to see a 6.5% growth this year. In December, the Fed had forecast a 4.2% growth for the economy. The Fed expects inflation to be at 2.4% this year, above its target of 2%.
The central bank said rates will likely remain near-zero through 2023. Later, the Fed Chair Jerome Powell said the monetary policy stance is appropriate and there is no need to react to a surge in Treasury Yields.
The yield on 10-Year Treasury Note rose to a new 13-month high of 1.75% before easing a bit.
The Labor Department said initial jobless claims climbed to 770,000 in the week ended March 13th, an increase of 45,000 from the previous week’s revised level of 725,000. Economists had expected jobless claims to edge down to 700,000 from the 712,000 originally reported for the previous week.
A separate report released by the Philadelphia Federal Reserve showed its reading on regional manufacturing activity spiked to a nearly 50-year high in March.
The dollar index rose to 91.90 before easing to 91.84, still firmly up with a strong gain of about 0.43%.
Against the Euro, the dollar firmed up to $1.1914, gaining nearly 0.6%. Data from Eurostat showed the euro area trade surplus fell to a seasonally adjusted EUR 24.2 billion from EUR 27.5 billion in December. Exports were down 2.8% month-on-month in January and imports dropped 1.3%.
The Pound Sterling weakened against the dollar and was fetching $1.3933 a unit, more than 0.2% less than Wednesday’s close of $1.3963. The Bank of England today left its benchmark rate and quantitative easing unchanged, with its Monetary Policy Committee voting to hold the interest rate at 0.1% and the quantitative easing at GBP 895 billion.
The BoE’s monetary policy committee said it did not intend to tighten monetary policy at least until there was clear evidence that significant progress was being made in eliminating spare capacity and achieving the 2% inflation target sustainably.
The Yen was slightly weak at 108.91 a dollar, after closing at 108.84 on Wednesday. The Aussie was weaker by about 0.5% with the AUD-USD pair at 0.7760.
The Swiss franc weakened to 0.9279, sliding from 0.9227. Data from the Federal Customs Administration showed Switzerland’s exports declined by a real 1.4% month-on-month in February after rising by 6% in January. In December, exports decreased 6.1%. Imports rose 0.3% monthly in February, after a 1.8% increase in the previous month.
A report from the Federal Statistical Office said Switzerland’s producer and import prices decreased by 1.1% year-on-year in February.
The Loonie slid to C$1.2507, giving up 0.8% from previous close of C$1.2405. According to a report from Automatic Data Processing Inc., private businesses in Canada shed 100,800 jobs in February, after a revised 65,800 decrease in January.
Data from Statistics Canada showed prices of new homes in Canada rose by 1.9% from the previous month in February, the most since February 1989. New house prices rose 7% year over year, the largest increase since July 2007.
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