The dollar gained some ground against other major currencies on Thursday, after the Federal Reserve raised interest rates by 25 basis points on Wednesday, while markets turned their attention to a slew of U.S. data and the Bank of England’s policy decision due later in the day.
EUR/USD slid 0.33% to 1.1181, off the previous session’s seven-month high of 1.1296.
In a widely expected move, the Federal Reserve raised interest rates from 1.00% to 1.25%, in a widely expected move on Wednesday. However, disappointing U.S. inflation data released the same day raised questions about whether the central bank will be able to hike rates again later this year.
Sentiment on the greenback was also expected to remain vulnerable amid mounting U.S. political concerns after the Washington Post reported on Wednesday that U.S. President Donald Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice.
GBP/USD declined 0.33% to 1.2703 after the U.K. Office for National Statistics said retail sales fell 1.2% in May, compared to expectations for a 0.8% fall and after a revised 2.5% increase the previous month.
Year-on-year, retail sales increased by 0.9% last month, compared to forecasts for a 1.7% rise.
Core retail sales, which exclude automobiles and fuel, decreased by 1.6% in May, compared to forecasts for a 0.8% slide.
The pound was also under pressure amid mounting political uncertainty in the U.K. as Prime Minister Theresa May faces calls to soften her stance on Brexit days before negotiations on leaving the EU begin.
Later Thursday, the BoE was expected to leave its monetary policy unchanged but market participants will be looking for potential clues on future policy moves.
USD/JPY added 0.15% to 109.74, while USD/CHF gained 0.25% to 0.9735.
Also Thursday, the Swiss National Bank left interest rates on hold at -0.75%, in line with expectations and said the local currency was still “significantly overvalued.”
The SNB added that it will “remain active in the foreign exchange market, as necessary,” while taking the overall currency situation into consideration.
The Australian dollar was stronger, with AUD/USD up 0.22% at 0.7606, while NZD/USD dropped 0.56% to 0.7230.
The Australian Bureau of Statistics earlier reported that the number of employed people rose by 42,000 in May, beating expectations for a 10,000 gain. The unemployment rate ticked down to 5.% from 5.7%.
Separately, Statistics New Zealand said gross domestic product rose 0.5% in the first quarter, confounding expectations for a 0.7% growth rate. Year-on-year, the New Zealand economy grew 2.5%, disappointing forecasts for a 2.7% growth rate.
Meanwhile, USD/CAD held steady at 1.3251, off the previous session’s more than three-month low of 1.3163.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.27% at 97.17, off Wednesday’s seven-month lows of 96.31.
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