Dollar rises on jobless claims, though geopolitical woes dampen gains

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Investing.com - A better-than-expected weekly report on U.S. jobless claims bolstered the dollar over other major currencies on Thursday, though fears military conflicts in Ukraine and in the Middle East may crimp global recovery capped the greenback's advance and sent investors to gold.

In U.S. trading on Thursday, EUR/USD was down 0.13% at 1.3364.

The U.S. Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Aug. 2 fell by 14,000 to 289,000 from the previous week's total of 303,000.


Analysts had expected jobless claims to rise by 2,000 to 305,000 last week, and the numbers confirmed market expectations for the Federal Reserve to close its monthly bond-buying stimulus program in October and begin hiking interest rates afterwards in 2015.

Demand for the greenback has been on the rise in recent sessions due to upbeat U.S. trade balance, service-sector, economic growth and other data.

Meanwhile in Europe, the European Central Bank kept its main refinancing rate at 0.15% earlier Thursday in a widely anticipated decision.

ECB President Mario Draghi attributed softening inflation rates to energy concerns and added the monetary authority still expects "moderate" and "uneven" economic recovery in the euro area economy.

Interest rates will remain at present levels "for an extended period of time," while the bank remains committed to using unconventional measures if the outlook deteriorates, Draghi said, adding that inflation is expected to remain soft in the coming months before gradually rising in 2015 and 2016.

Risks to recovery remain to the downside Draghi said, though heightened geopolitical risk could affect the economy.

Monetary authorities are still assessing possible impacts that sanctions slapped on Russia for its alleged meddling in Ukraine may on the euro area economy.

Still, the dollar did face headwinds of its own, mainly in the form of geopolitical concerns that sent investors snapping up safe-haven positions in gold, which tends to trade inversely with the greenback.

Reports that Russia has amassed more troops near its border with Ukraine have bolstered gold prices due to the safe-haven appeal the yellow metal enjoys during times of geopolitical uncertainty.

Since the West slapped sanctions on for allegedly meddling in Ukraine's affairs by supporting separatists, Russian troops along the border have reportedly jumped to 20,000 from 8,000.

News the U.S. is considering launching air strikes in Iraq to halt a Sunni insurgency as well as conduct airdrops of food and medicine to assist those displaced by the conflict bolstered gold and softened the greenback also.

The dollar was down against the yen, with USD/JPY down 0.06% at 102.05, and up against the Swiss franc, with USD/CHF up 0.12% at 0.9087.

The greenback was up against the pound, with GBP/USD down 0.11% at 1.6836.

In the U.K. earlier, the Bank of England said it was maintaining the benchmark interest rate at 0.50% and that the stock of asset purchases financed by the issuance of central bank reserves will remain at £375 billion.

The dollar was up against its counterparts in Canada, Australia and New Zealand, with USD/CAD up 0.06% at 1.0923, AUD/USD down 0.89% at 0.9271 and NZD/USD down 0.07% at 0.8472.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% at 81.59.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

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