The US dollar subsides after a slightly hotter inflation, unemployment claims to uptick
The US dollar slipped on Thursday after a hotter August inflation data and an initial unemployment claim that was weaker than an estimate of strengthening the view that the Federal Reserve would continue to cut interest rates next week.
In morning trading, the dollar last fell against Yen at 147.42 Yen, while Euro rose 0.3% to $ 1,1731. As a result, the dollar index, the size of the Greenback value to the six main currencies, down 0.2% to 97.62.
US consumer prices rose more than expected in August while the annual inflation improvement was the largest in seven months. The consumer price index increased 0.4% last month after an increase of 0.2% in July, said the Department of Manpower Statistics Bureau.
Within 12 months to August, CPI rose 2.9%, the biggest increase since January, after rising 2.7% in July.
More importantly, the initial claim for the State unemployment allowance jumped 26,000 to 263,000 which was adjusted seasonally for the week ended September 6, the data showed. Economists surveyed by Reuters have estimated 235,000 claims for the last week.
“For the first time for a long time, CPI is being overshadowed on the day of its release by other data series,” wrote Josh Jamner, an analyst of a senior investment strategy at Clearbridge Investments in the comments that were removed.
He noted that the surge in initial unemployment claims to the highest level in four years had briefly helped encourage the results of 10 -year treasury below 4%, despite an increase that was greater than the estimated consumer price index.
“This dynamics illustrates Fed’s focus on half of the ‘maximum’ double mandate, with today’s inflation mold not hot enough in our view to thwart the 25 -base interest rate cutting at the FOMC meeting next week.”
Attention to the labor market has increased after two poor US job reports over the past few days. The number of non-agricultural jobs for August showed that only 22,000 jobs were created compared to the estimated 75,000, while the payroll was revised down at 911,000 for the April 2024 period to March 2025.
Following Thursday data, Fed Funds Futures is the price in the opportunity of 91% of the 25 BP cuts this month and a 9% chance of a decline in 50 bp, according to Fedwatch CME. It did not change from the level on Wednesday night.
In other currency pairs, the dollar fell 0.3% versus Swiss franc to 0.7966, while Sterling rose 0.2% to $ 1,3552.
Currency offer price on September 11:48 pm GMT
Source: Reuters (reporting by Gerrtrude Chavez-Dreyfuss; Editing by Aidan Lewis, Kirsten Donovan)
