The dollar index (DXY00) rallied to a nearly 1.5-year high on Thursday, finishing up +0.64%. Soaring T-note yields strengthened the dollar’s interest rate differentials after the 10-year T-note yield rose to a 24-year high of 5.34% on Thursday. Also, signs of strength in the US labor market are hawkish for Fed policy and supportive of the dollar after weekly jobless claims fell to a 10-week low and continuing unemployment claims fell to a 3.5-year low. In addition, today’s +2% increase in WTI crude oil raises inflation expectations and could prompt the Fed to tighten monetary policy, a bullish factor for the dollar.
US weekly initial unemployment claims unexpectedly fell -1,000 to a 10-week low of 197,000, showing a stronger labor market than expectations of an increase to 200,000. Weekly continuing claims unexpectedly fell -11,000 to a 3.5-year low of 1.701 million, showing a stronger labor market than expectations of an increase to 1.725 million.
