The U.S. Dollar rose to its highest level against a basket of major currencies since August 16 on Thursday. The catalysts were increased demand for higher risk assets, rising expectations for a Fed rate hike, and hopes for progress on U.S. tax reforms. Investors also seemed optimistic that Friday’s U.S. Non-Farm Payrolls report would provide additional support.
December U.S. Dollar Index futures finished the session at 93.803, up 0.519 or +0.56%.
The index was underpinned by fresh economic data which showed that orders for core capital goods in August were stronger than previously reported. The Greenback drew additional support on reports that Congressional Republicans moved to hasten an overhaul of the U.S. tax code on Thursday, with the Republican-controlled House of Representatives approving a fiscal 2018 spending blueprint to help advance an eventual tax bill.
U.S. Economic Data
On Thursday, outplacement firm Challenger, Gray and Christmas said companies announced plans to cut 32,346 jobs in September. It also said the number is down 27 percent from last year. The report also said that layoff plans this year are highest in retail. Finally, the firm said the year-to-date figure for the third quarter was the lowest since 1996.
The Labor Department said on Thursday that first-time claims for U.S. unemployment benefits fell by more than expected in the week-ended September 30th. The report said initial jobless claims dropped to 260,000, a decrease of 12,000 from the previous week’s unrevised level of 272,000. Economists had expected jobless claims to edge down to 265,000.
The U.S. trade deficit narrowed to $42.4 billion in August, down $1.2 billion from July. Exports for the month were $195.3 billion, while imports came to $237.7 billion. The trade balance figure was the lowest level in nearly a year.
Factory good orders increased 1.2 percent as demand for a range of goods rose, the Commerce Department said on Thursday. Orders fell by an unrevised 3.3 percent in July. Traders had priced in an increase of 1.0 percent in August.
Also on Thursday, Fed Governor Jerome Powell said more rules and regulations are not always the best solution to problems in financial markets and U.S. government agencies must take a balanced approach to such decisions.
Federal Reserve Bank of San Francisco President John Williams said moderate growth and his outlook for higher inflation will allow the U.S. central bank to raise interest rates.
Philadelphia Fed President Patrick Harker said on Thursday that he’s “penciled in” a move in December and three hikes next year.