U.S. Dollar Sheds Ground Against Major Rivals

(RTTNews) - The U.S. dollar drifted lower against most of its major counterparts on Thursday as traders digested the Federal Reserve's decision to hike interest rates by 75 basis points.

The Bank of England and the Swiss National Bank hiked their interest rates as well to combat inflation.

Following the Federal Reserve's widely expected 75 basis point interest rate hike on Wednesday, the Swiss National Bank unexpectedly raised interest rates for the first time since 2007.

The Bank of England also announced another 25 basis point rate hike. The BoE's Monetary Policy Committee voted 6-3 to raise the bank rate to 1.25%, the highest rate since early 2009.

Taiwan's central bank also increased its benchmark rate by 0.125 percentage points, raising rates for the second time in a row

In U.S. economic news, the Labor Department released a report that showed initial jobless claims edged down to 229,000 last week, a decrease of 3,000 from a week earlier. Economists had expected jobless claims to dip to 220,000 from the 229,000 originally reported for the previous week.

Meanwhile, a separate released by the Commerce Department showed new residential construction in the U.S. plunged by much more than expected in the month of May.

The report said housing starts tumbled by 14.4% to an annual rate of 1.549 million in May after jumping by 5.5% to a revised rate of 1.810 million in April. Economists had expected housing starts to decrease by 1.3% to an annual rate of 1.701 million from the 1.724 million originally reported for the previous month.

The report also showed building permits slumped by 7% to an annual rate of 1.695 million in May after falling by 3% to a revised rate of 1.823 million in April. Economists had expected building permits to declined by 1.9% to an annual rate of 1.785 million from the 1.819 million origially reported for the previous week.

The Federal Reserve Bank of Philadelphia also released a report showing a modest contraction in regional manufacturing activity in the month of June.

The dollar index, which dropped to 103.42 around mid afternoon, recovered some lost ground subsequently, but still remained in the red with a loss of about 1.28% at 103.81.

Against the Euro, the dollar weakened to $1.0549 from $1.0446.

The dollar is trading at $1.2347 against Pound Sterling, losing ground from $1.2177.

The Japanese currency is stronger as well against the dollar at 132.18 yen, firming from 133.83 yen.

Against the Aussie, the dollar weakened to 0.7047 from 0.7002.

The Swiss franc strengthened to 0.9663 a dollar from 0.9940 after the Swiss National Bank announced a surprise rate hike.

Against the Loonie, the dollar firmed, fetching C$1.2946 a unit, compared with C$1.2890 on Wednesday.