The U.S. dollar recovered well after an early decline on Thursday, riding on data showing an unexpected increase in consumer price inflation in the month of June, but failed to make significant progress, due to an imminent interest rate cut later this month.
Against the major currencies, the dollar fared reasonably well against the euro and the Japanese yen.
The dollar index, which rose to 97.15, after having declined initially to 96.80, was last seen hovering around 97.05, down 0.05% from previous close.
Against the euro, the dollar recovered to $1.1256 from an early low of $1.1287.
The dollar was down 0.16% at 1.2522 a pound sterling, weakening from an early high of 1.2489 a unit of the British currency.
Against the Yen, the dollar rallied from a low of 107.86 yen to 108.53 before paring gains and dropping to the flat line at 108.46 yen.
The dollar was up marginally against Swiss franc at 0.9902. Against the Aussie, the greenback shed 0.22% with the pair trading at 0.6974, while against the loonie, it was down 0.13% at 1.3065.
On the inflation front, the Labor Department’s report said a steep drop in gas prices was offset by an increase in the cost of shelter.
The report said its consumer price index inched up by 0.1% in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.
The unexpected uptick in consumer prices came even though energy prices tumbled by 2.3% in June after falling by 0.6% in May. Gas prices plunged by 3.6%.
Excluding food and energy prices, core consumer prices rose by 0.3% in June after inching up by 0.1% for four consecutive months. Core prices had been expected to edge up by 0.2%.
Shelter costs rose 0.3%, leading core prices higher, while prices for apparel, used cars and trucks, and household furnishings and operations also showed notable increases.
Despite the unexpected monthly increase, the Labor Department said the annual rate of consumer price growth slowed to 1.6% in June from 1.8% in May.
Another report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 6th, dropping to 209,000, a decrease of 13,000 from the previous week’s revised level of 222,000.
Economists had expected jobless claims to inch up to 223,000 from the 221,000 originally reported for the previous week.
The material has been provided by InstaForex Company – www.instaforex.com