Dollar Drifts Lower Against Major Rivals

(RTTNews) - The U.S. dollar shed ground against its major counterparts on Thursday after the European Central Bank raised interest rates and signaled another hike in July.

Despite hawkish remarks from the Federal Reserve on Wednesday, the latest data on jobless claims in the U.S. has raised optimism that the central bank will not follow through.

Data from the Labor Department showed initial jobless claims held at their highest level since October 2021 in the week ended June 9th.

The Labor Department said initial jobless claims came in at 262,000, unchanged from the previous week's revised level.

Economists had expected jobless claims to dip to 249,000 from the 261,000 originally reported for the previous week.

A separate Labor Department report showing import prices in the U.S. fell by much more than expected in the month of May has also generated optimism about the outlook for inflation.

The report said import prices slid by 0.6% in May, reflecting a sharp pullback in prices for fuel imports and a modest decrease in prices for non-fuel imports. Economists had expected import prices to edge down by 0.1%.

The ECB today increased the main refinancing rate, or refi, by 25 basis points to 4%. The previous change in the interest rates was a similar hike in May. The ECB has raised rates in every policy session since July last year, by a cumulative 350 basis points.

The ECB expects core inflation, excluding energy and food, to reach 5.1% in 2023, before easing to 3% next year, and further down to 2.3% in 2025. The Eurozone economy is now projected to grow by 0.9% this year, 1.5% next year and 1.6% in 2025.

The dollar index dropped to 102.09, losing more than 0.8%.

Against the Euro, the dollar has weakened to 1.0949 from 1.0836. The dollar is down against Pound Sterling at 1.2784, easing nearly 1% from 1.2665.

Against the Japanese currency, the dollar is trading at 0.6886, weakening from 0.6795. The dollar is weak against Swiss franc, fetching CHF 0.8912 a unit, compared to CHF 0.9011 on Wednesday. The loonie is stronger against the dollar at C$1.3221, firming from C$1.3327, as oil prices rose sharply.