The dollar again weakened against the euro, the yen and the British pound on Thursday as markets continued to absorb ambivalent signals from the U.S. central bank. While the Fed can point to the continued decline in jobless claims as an indication of improvement in the labor market, without strong topline job creation leading to robust income growth, many at the Fed will continue to question the true underlying health of the USA labor market, arguing, as we saw in yesterday’s minutes, that the labor market may not be as close to full-employment as a 4.9% unemployment rate would suggest.
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The minutes showed US policymakers were divided as to whether to hike interest rates in the near future, a move that would have hurt gold. Several Fed policymakers, however, said a slowdown in the future pace of hiring would argue against a near-term hike, and FOMC members said they wanted to “leave their policy options open”.
The euro hit a session high of $1.1356 and the dollar touched a session low against the franc of 0.9540 franc.
The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.58 percent at 94.170 after touching a almost eight-week low of 94.141. Australian shares closed 0.3 per cent higher, recording a 0.1 per cent decline for the week. Sterling inched higher against the dollar on Thursday after United Kingdom retail sales for July beat forecasts, apparently unaffected by Britain’s vote to leave the European Union.
US gold dropped 0.4 percent to $1,351.60 an ounce.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.19 percent to 955.99 tonnes on Thursday.
Fed officials raised interest rates last December for the first time since the financial crisis.
Elsewhere, there were 262,000 initial unemployment claims filed in the US last week, a decline of 4,000 from the previous week.
“(Dudley) said his views haven’t changed, but at this point, I think the market has sort of bought back into the dovish Fed story”, said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman in NY.
U.S. Treasury yields fell on Thursday on bets the Federal Reserve is in no hurry to raise interest rates with domestic inflation stuck below its 2 percent goal and uncertainty about global risks to economic growth at home.
The dollar index, which measures the greenback against six major peers, was down 0.59 per cent at 94.159 in late trading, the lowest level in seven weeks.
The Dow Jones Industrial Average on Thursday edged up 3.08 points, or 0.02 per cent, to 18,577.02, Xinhua news agency reported.
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Silver for September delivery gained 0.100 or 0.51% to 19.748 an ounce.
