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Dollar index hits 2-month high on upbeat US data

Pound coin
Matt Cardy | Getty Images
Pound coin

The dollar gained against a basket of currencies on Thursday, hitting its strongest level in two months as encouraging data on U.S. jobs reinforced the view the Federal Reserve would raise interest rates at the end of the year.

Sterling on the other hand fell to a fresh 31-year low versus the greenback on renewed anxiety about the repercussion from Britain's "hard" exit from the European Union. First-time filings for U.S. jobless benefits unexpectedly fell to a near 43-year low, the U.S. Labor Department said.


The claims figures came ahead of the government's payrolls report due at 8:30 a.m. (1230 GMT) on Friday, in which analysts polled by Reuters forecast a hiring of 175,000 workers in September.

"It looks like the U.S. economy is righting itself at the end of the third quarter," said Christopher Vecchio, currency analyst at DailyFX in New York.

The growing spread between U.S. and German bond yields has also bolstered the greenback. The difference between two-year U.S. and German government debt hovered at 1.51 percentage points on Thursday, its widest in a decade.

The dollar index was last up 0.5 percent at 96.552 after touching its highest level since early August. The greenback reached a one-month peak versus the yen, last up 0.62 percent at 104.11 yen.

The euro slipped against the dollar after the European Central Bank released minutes on its Sept. 7-8 meeting where policymakers agreed on ongoing monetary stimulus to support the euro zone economy.

The minutes undermined speculation the ECB would consider tapering its monthly bond purchases as it may conclude its quantitative easing program, perhaps as early as March 2017. The single currency was down 0.3 percent at $1.1166.

The euro touched a near five-week high versus the yen at 116.28 yen before retreating to 116.07 yen, up 0.1 percent on the day.

Sterling slipped against the dollar as investors fretted over signs that the British government is ready to prioritize controls on immigration over membership of the European Union's single market. The pound was 0.9 percent lower at $1.2634 after touching a fresh three-decade low of $1.2622. It fell to a five-year low against euro at 88.51 pence earlier Thursday. It was last down 0.5 percent at 88.30 pence per euro.