The dollar rose to a six-week high on Thursday after a set of solid US economic data further stoked expectations that the Federal Reserve could raise interest rates as many as four times this year. The greenback has gained momentum this week following the first public testimony of Federal Reserve Chairman Jerome Powell, who struck an upbeat note on the US economy.
Powell delivered testimony again on Thursday to Congress, this time before the Senate Banking Committee. Investors will want to see whether Powell, in his question and answer session, repeats his hawkish comments or tries to dial back some of his message from Tuesday. The euro meanwhile hit a seven-week low on expectations that euro zone interest rates could stay at record lows throughout 2018. Soft inflation data in the euro zone on Wednesday dented expectations that the European Central Bank (ECB) will dial back its stimulus this year.
Thursday's US data, on the other hand, showed that a gauge of underlying inflation posted its largest gain in 12 months, while another report showed the number of Americans filing for unemployment benefits fell last week to the lowest level in more than 48 years. In mid-morning trading, the dollar index climbed to 90.932, a six-week peak, with Powell's optimism on the economy in public testimony to Congress suggesting the US central bank is going to raise interest rates one more time than the three hikes markets had expected.
In the euro zone, data showing the currency bloc's manufacturing boom slowed last month added to the downbeat mood, helping send the euro as low as $1.2153, its weakest since January 12.
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