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Forex, Dollar US Jobless Claims Decline, Rate Hike Challenge

Forex, Dollar US Jobless Claims Decline, Rate Hike Challenge

NEW YORK (Reuters) – The dollar rose against a basket of currencies last week after data showed the number of new jobless claims in the U.S. unexpectedly fell, bolstering expectations that the Federal Reserve may continue its rate hike cycle if the economy remains strong.

State jobless claims totaled 228,000 for the week ended July 15, according to the Labor Department. A Reuters poll had forecast 242,000 inquiries last week.

Odds of the central bank continuing its rate hike cycle after a widely expected 25 basis point hike next week have grown on the back of the data. Fed fund futures traders are pricing in another 34 bps tightening against yesterday’s forecast of a 32 bps hike.

The dollar lost ground last week after data on consumer and producer prices indicated that inflationary pressures would be closer to the 2% target set by the central bank.

At around 17.00, the dollar index rose 0.52% against a basket of currencies to settle at 100.805. The euro was down 0.15% at $1.1142.

The pound continued to fall after yesterday’s UK inflation data signaled a trend rate of 7.9%, its lowest in a year, easing pressure on the Bank of England to keep raising interest rates.

The British currency fell 0.48% to $1.285, down from $1.3144 on Thursday, its highest level since April 2022.

The greenback rose 0.09% to 140.28 against the Japanese yen.

(Translated by Camilla Bori, edited by Antonella Cinelli)

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