The dollar index (DXY00) on Thursday rose by +0.67% and posted a 1-3/4 month high. The dollar Thursday moved higher on optimism that the U.S. will raise its debt ceiling. Also, Thursday’s stronger-than-expected U.S. economic reports on weekly jobless claims and the May Philadelphia Fed business outlook survey are hawkish for Fed policy. In addition, the jump in the 10-year T-note yield Thursday to a 2-month high strengthens the dollar’s interest rate differentials.
Thursday’s U.S. economic reports were primarily bullish for the dollar. U.S. weekly initial unemployment claims fell -22,000 to 242,000, showing a stronger labor market than expectations of 251,000. Also, weekly continuing claims unexpectedly fell -8,000 to 1.799 million, showing a stronger labor market than expectations of an increase to 1.820 million. In addition, the May Philadelphia Fed business outlook survey rose +20.9 to a 4-month high of -10.4, stronger than expectations of -20.0. On the negative side, Apr existing home sales fell -3.4% m/m to 4.28 million, weaker than expectations of 4.30 million.
