US dollar gains, sentiment still frayed; euro falters
The U.S. dollar advanced on Thursday after three days of losses, lifted partly by the passage of President Donald Trump's bill for huge tax and spending cuts by the House of Representatives, as the euro stumbled following data painting a bleak economic picture for the euro zone.
Bitcoin , meanwhile, pushed to a new all-time high, as investors sought out alternatives to U.S. assets.
Trump's sweeping tax bill has been the market's focus and its passage has been met partly with relief and partly with caution. The bill is set to add to the country's ballooning debt pile. The market is now looking at weeks of debate on it in the Republican-led Senate.
The non-partisan Congressional Budget Office estimates the bill will add $3.8 trillion to the $36.2 trillion in U.S. debt over the next decade.
In afternoon trading, the dollar edged up 0.1% to 143.75 yen after earlier dropping to 142.80 yen, its weakest level since May 7.
The euro fell 0.3% against the dollar to $1.1293, after rising on Wednesday for a third straight session. Euro zone business activity unexpectedly contracted this month, HCOB's preliminary composite Purchasing Managers' Index showed on Thursday.
In contrast, U.S. business activity picked up in May due in part to the truce in the trade war between Washington and China. S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 52.1 this month from 50.6 in April. A reading above 50 indicates expansion in the private sector.
A low weekly jobless claims reading also gave the dollar a bit of a lift as the labor market continued to show stability. The weekly report showed unemployment rolls approaching levels last seen in late 2021.
Initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 227,000 for the week ended May 17. Economists polled by Reuters had forecast 230,000 claims for the latest week.
Meanwhile, a lacklustre 20-year bond sale on Wednesday reinforced the "Sell America" narrative and weighed on the dollar overnight. The soft auction also put some pressure on Wall Street as well, with traders already jittery after Moody's cut its triple-A U.S. credit rating last week.
In other currency pairs, sterling was flat against the dollar at $1.3433, not far from Wednesday's three-year peak of $1.3468 after hot inflation dampened expectations for rate cuts from the Bank of England.
Versus the Swiss franc, the dollar gained 0.5% to 0.8286 francs .
The dollar index , which measures the U.S. currency against six peers, rose 0.3% to 99.905, above Wednesday's two-week low of 99.333.
Bitcoin climbed as high as $111,965.62, a fresh all-time peak and a 3.4% increase from Wednesday's close.
Source : Reuters
