By James Ramage
The dollar rose against the euro and the British pound on
Thursday, as better-than-expected employment data and remarks from
regional Federal Reserve presidents alluding to the need for higher
interest rates lifted the U.S. currency from early morning
losses.
The euro fell 0.9% to $1.0874 by the afternoon, from trading
above $1.10 in the morning. The British pound slipped 0.3% to
$1.4833 from more than $1.49. The dollar also rebounded against the
Japanese yen to climb above Y119, but is still 0.2% lower for the
session at Y119.29.
The dollar turned higher after the Labor Department said initial
U.S. jobless claims decreased by 9,000 to 282,000 in the week ended
March 21. Economists had predicted the claims would total
290,000.
"The jobless claims number, one of the best readings in a while,
helped keep a Fed rate hike on the horizon; that's helped pull the
dollar higher," said Joe Manimbo, senior market analyst at Western
Union.
The dollar also strengthened after Federal Reserve Bank of
Atlanta President Dennis Lockhart told attendees of the Engage
International Investment Education Symposium in Detroit that a
strong U.S. economy meant that summer Fed meetings are "in play"
for possible rate increases. Mr. Lockhart sits as a voting member
on the central bank's policy-making committee this year.
Investors have poured into U.S. assets in hopes that the Fed
would raise interest rates at a time when rival central banks were
easing monetary policy and weakening their currencies. Higher U.S.
rates would increase demand for the dollar, as they would boost
returns on assets denominated in the currency.
In addition, Federal Reserve Bank of St. Louis President James
Bullard reiterated past views that interest rates should rise soon,
as the risks for holding them near zero for too long remained
significant. Mr. Bullard isn't a voting member of the Fed's
policy-setting committee this year.
The dollar has struggled to find traction to continue its ascent
against rivals after the Fed suggested the currency was playing a
role in slowing U.S. exports and growth at its monetary-policy
meeting last week. The central bank also trimmed its forecast for
U.S. inflation and growth at the meeting, pushing back market
expectations for higher interest rates and sending the dollar lower
against other currencies.
Next week, the markets will see the Fed's preferred inflation
gauge, the measure for personal consumption expenditures, on
Monday, as well as the jobs report Friday. The central bank uses
both data points to set policy.
Write to James Ramage at james.ramage@wsj.com