The U.S. dollar index rose to a one-week high on Thursday, finishing up by 0.03%, following an unexpected decline in weekly initial jobless claims which fell by 4,000 to 203,000, defying expectations of an increase to 208,000. This labor market strength was bolstered by hawkish remarks from Kansas City Fed President Jeff Schmid and Cleveland Fed President Beth Hammack, indicating that current Fed policy is not constraining the economy.
In Europe, the euro fell to a one-week low against the dollar, down by 0.02%, amid concerns over escalating tensions in the Russia-Ukraine conflict. However, a stronger-than-expected German consumer confidence index rose to -26.6, higher than the forecast of -29.5. The markets are pricing in a 97% chance of a 25 basis point ECB rate hike at its next meeting.
In the currency sector, the yen weakened but found some support from comments by BOJ Deputy Governor Ryozo Himino, with an 82% probability of a 25 basis point BOJ rate hike expected at the September 18 meeting. Precious metals also saw gains, with October COMEX gold and September COMEX silver rising by 0.22% and 2.07% respectively, despite a stronger dollar and hawkish Fed comments.
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