Dollar Rises Against Major Counterparts

(RTTNews) - The U.S. dollar firmed against major counterparts on Thursday as dovish comments from the European Central Bank and a rate cut decision by the Bank of England took some shine off the Euro and Pound Sterling, respectively. Weak U.S. economic data limited the dollar's upside.

In economic news today, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly contracted at an accelerated rate in the month of July.

The ISM said its manufacturing PMI fell to 46.8 in July from 48.5 in June, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.8. With the bigger than expected decrease, the manufacturing PMI dropped to its lowest level since hitting 46.6 in November 2023.

The Labor Department's data showed initial jobless claims climbed to 249,000 in the week ended July 27th, an increase of 14,000 from the previous week's unrevised level of 235,000. Economists had expected jobless claims to inch up to 236,000.

Labor productivity in the U.S. shot up by more than expected in the second quarter, surging by 2.3%, according to a report released by the Labor Department on Thursday. Labor productivity increased by a revised 0.4% in the first quarter.

Economists had expected labor productivity to jump by 1.7% compared to the 0.2% uptick that had been reported for the previous quarter.

The dollar index climbed to 104.45, gaining about 0.35%.

Against the Euro, the dollar strengthened to 1.0787 from 1.0826.

The dollar firmed to 1.2734 against Pound Sterling, gaining from 1.2856 a unit of the British currency. The Bank of England lowered its benchmark rate for the first time since the onset of the coronavirus pandemic as inflation receded and the underlying growth momentum remained weaker.

In a very close call, the Monetary Policy Committee, led by Governor Andrew Bailey, decided to cut the bank rate by a quarter-point to 5% from 5.25%, which was the highest since early 2008.

Against the Japanese currency, the dollar weakened to 149.66 yen. The dollar firmed to 0.6496 against the Aussie.

The dollar dropped to CHF 0.8732 against the Swiss currency. Against the Loonie, the dollar strengthened to C$ 1.3884.