(Recasts lead; updates prices throughout, adds tables, economic data in paragraphs 2, 3 and 6; analyst comments in paragraphs 4, 5, 8, and 13)
The dollar rose against a basket of its major peers on Thursday, after better-than-expected U.S. data and a dovish European Central Bank forced investors to reconsider the assumption that the Federal Reserve will pause interest-rate hikes.
The U.S. economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending, while businesses boosted investment in equipment, potentially keeping a recession at bay.
Meanwhile, the number of people receiving benefits after an initial week of aid, a proxy for hiring, dropped 59,000 to 1.690 million during the week ending July 15. The so-called continuing claims remain low by historical standards, suggesting that some laid-off workers are quickly finding employment.
"The assessment of Q2 data was extremely strong and points towards demand remaining a bit firmer than many had projected going into this quarter," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
"That tells us that there's still considerable two-way risks to the incoming U.S. data, and the market will probably need to reassess its view that the Fed doesn't need to tighten again."
The dollar index =USD , which measures the currency against six major peers, rose 0.682% to 101.770, while the euro EUR= is down 0.86% at $1.0988.
The ECB lifted its deposit rate to a historic high on Thursday and kept its options open on whether more increases will be needed to bring down inflation. Evidence of a slowdown in Europe has mounted as loan demands hit a record low in the second quarter, business confidence has deteriorated in Germany, and disappointing Purchasing Manager Indexes came in below expectations for the euro zone as a whole.
"All in all, it's still the case that the U.S. economy is looking resilient on various different fronts," said Jane Foley, head of FX strategy at Rabobank London. "The dollar has recovered some ground recently, but certainly it does question the market's expectation for interest rate cuts, for instance, from the Fed looking ahead."
The Fed raised rates by a quarter of a percentage point, as expected, on Wednesday, marking its 11th rate increase in its last 12 meetings. Fed Chair Jerome Powell left open the possibility of another hike in September.
Markets await news from the Bank of Japan, which analysts said could be the wildcard of the trio of central banks to meet this week.
The Bank of Japan (BOJ) announces its monetary policy decision on Friday, and is largely seen maintaining its ultra-loose policy stance, although a tweak to its yield curve control policy remains a possibility.
The Japanese yen JPY= weakened 0.72% versus the dollar at 141.22, while Sterling GBP= was last trading at $1.2834, down 0.81% .
"Even if the Bank of Japan are cautious and don't deliver any change in policy tomorrow, it's quite possible that expectations will just immediately switch to September, meaning that any sell off in the yen could be quite short lived," said Foley.
In cryptocurrencies, bitcoin BTC= last fell 0.82% to $29,334.00.
Ethereum ETH= ETH=BTSP last fell 0.58% to $1,869.10.
======================================================== Currency bid prices at 10:53AM (1453 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD101.7700 101.1000 +0.68% -1.662% +101.8400 +100.5400 Euro/Dollar EUR=EBS$1.0990 $1.1086 -0.86% +2.57% +$1.1150 +$1.0985 Dollar/Yen JPY=EBS141.2300 140.2450 +0.71% +7.73% +141.3050 +139.3850 Euro/Yen EURJPY=155.20 155.45 -0.16% +10.62% +156.2300 +154.8100 Dollar/Swiss CHF=EBS0.8683 0.8606 +0.91% -6.08% +0.8688 +0.8554 Sterling/Dollar GBP=D3$1.2835 $1.2940 -0.80% +6.14% +$1.2995 +$1.2826 Dollar/Canadian CAD=D31.3198 1.3206 -0.06% -2.59% +1.3210 +1.3159 Aussie/Dollar AUD=D3$0.6722 $0.6760 -0.55% -1.39% +$0.6821 +$0.6722 Euro/Swiss EURCHF=0.9540 0.9540 +0.00% -3.59% +0.9550 +0.9523 Euro/Sterling EURGBP=0.8560 0.8565 -0.06% -3.21% +0.8599 +0.8556 NZ NZD=D3Dollar/Dollar $0.6192 $0.6210 -0.27% -2.46% +$0.6273 +$0.6192 Dollar/Norway NOK=D310.1400 10.1460 +0.01% +3.39% +10.1610 +9.9990 Euro/Norway EURNOK=11.1441 11.2059 -0.55% +6.20% +11.2659 +11.1154 Dollar/Sweden SEK=10.4927 10.3921 +0.04% +0.82% +10.5081 +10.3004 Euro/Sweden EURSEK=11.5275 11.5224 +0.04% +3.39% +11.5465 +11.4731 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5EUSD performance https://tmsnrt.rs/3DxoCte
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