NEW YORK: The dollar rebounded on Thursday after private payrolls and unemployment benefits reports indicated the US labour market remains strong, raising the likelihood the Federal Reserve will raise interest rates later this month.

The number of Americans filing new claims for unemployment benefits increased moderately last week, the Labour Department said, while private payrolls surged last month in the biggest increase since February 2022, an ADP National Employment report showed.

A survey by the Institute for Supply Management (ISM) showed the US services sector grew faster than expected in June as new orders picked up, adding to data indicating a resilient economy in the face of tighter monetary policy.

While ISM showed a measure of prices paid by businesses fell to more than a three-year low, a sign inflation would continue to cool, Dallas Fed President Lorie Logan said she was very concerned “whether inflation will return to target in a sustainable and timely way.”

The dollar index, measuring the US currency against six others, including the euro and Japan’s yen, rose 0.18% to 103.51. The Japanese currency is traditionally considered as a safe haven asset.

The pound hit a two-week high against both the euro and dollar as financial markets bet that the Bank of England will raise rates to 6.5% early next year, pushing the yield on the two-year UK government bond to its highest since June 2008.