The dollar index (DXY00) on Thursday fell slightly by -0.05% after weak U.S. economic news knocked bond yields lower and weakened the dollar’s interest rate differentials. The dollar was also undercut by dovish comments Thursday from Fed Governor Cook and Cleveland Fed President Mester, who signaled they favor the Fed pausing rate hikes. The dollar saw underlying support as weakness in stocks boosted liquidity demand for the dollar.
Thursday’s U.S. economic news was mostly weaker-than-expected and bearish for the dollar. U.S. weekly initial unemployment claims rose +13,000 to 231,000, showing a weaker labor market than expectations of 220,000. Also, weekly continuing claims rose +32,000 to a 2-year high of 1.865 million, showing a weaker labor market than expectations of 1.843 million. In addition, Oct manufacturing production fell -0.7% m/m, weaker than expectations of -0.4% m/m and the biggest decline in 4 months. Finally, the Nov NAHB housing market index unexpectedly fell -6 to an 11-month low of 34, weaker than expectations of no change at 40.
