NEW YORK: The US dollar climbed to a six-week peak against basket of currencies on Thursday, after data showed producer prices for January came in higher than expected and jobless claims fell, suggesting the Federal Reserve will have to keep monetary policy tight for some time to bring down inflation.
The US currency also hit a new six-week high against the yen, euro, and Australian dollar in the wake of economic reports.
The US producer price index bounced to 0.7%, higher than both the consensus forecast of 0.4% and the December number, which showed a drop of 0.2%.
US jobless claims data also showed a resilient labor market, with claims of 194,000, compared with expectations of 200,000, according to a Reuters poll.
“We had a trickle of data particularly on the inflation front. The data runs have been positive. Yields are creeping up,” said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.
“So we’re seeing a bit of a reprieve in the recent softness in the dollar. The dollar is looking prone for a rebound anyway. A lot of the good news has already been priced into the euro the past few weeks,” he added.
In late morning trading, the dollar index was up 0.2% at 104.02, after earlier hitting a six-week high of 104.24.
Against the yen, the US dollar also hit a six-week peak, but was last little changed on the day at 134.19. Yen traders are waiting for a speech by Kazuo Ueda, the nominee to become the Bank of Japan’s next governor, at a confirmation hearing at the lower house of parliament on Feb. 24.
The interest rate futures market shows US rates could peak close to 5.25% by July before dropping to 5.0% by the end of the year.