U.S. Dollar Advances As Jobless Claims Drop, PCE Inflation Rises

The U.S. dollar moved up against its major counterparts in the New York session on Thursday, as the Federal Reserve's preferred gauge of inflation accelerated in July and initial jobless claims fell unexpectedly last week, supporting expectations that the central bank will keep interest rates on hold at its policy meeting next month.

Data from the Commerce Department showed that the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.

On a monthly basis, consumer prices rose 0.2 percent in July, matching the uptick in June as well as economist estimates.

The annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.

Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.

The report said personal income crept up by 0.2 percent in July after rising by 0.3 percent in June, while personal spending advanced by 0.8 percent in July after climbing by 0.6 percent in June.

Data from the Labor Department showed a slight decrease in first-time claims for U.S. unemployment benefits in the week ended August 26.

Initial jobless claims edged down to 228,000, a decrease of 4,000 from the previous week's revised level of 232,000.

Economists had expected jobless claims to inch up to 235,000 from the 230,000 originally reported for the previous week.

The greenback climbed to 0.8845 against the franc and 1.0840 against the euro, setting 2-day highs. Next key resistance for the currency may be located around 0.90 against the franc and 1.06 against the euro.

The greenback rebounded to 0.6461 against the aussie and 1.3551 against the loonie, from its early lows of 0.6507 and 1.3514, respectively. The greenback is seen facing resistance around 0.63 against the aussie and 1.38 against the loonie.

The greenback was up against the kiwi, at a 2-day high of 0.5930. The greenback may challenge resistance around the 0.56 level.

The greenback ticked up to 1.2652 against the pound, reversing from an early low of 1.2734. If the currency rises further, 1.23 is likely seen as its next upside target level.

In contrast, the greenback fell against the yen, touching a 1-week low of 145.45. On the downside, 138.00 is likely seen as its next support level.

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