The U.S. dollar extended its recent weakness and shed ground against its major counterparts on Thursday amid continued bets the Federal Reserve will cut interest rates this year.
The European Central Bank\'s policy announcement, its views on interest rates, Fed Chair Jerome Powell\'s congressional testimony, and the latest batch of U.S. economic data were all in focus.
Federal Reserve Chairman Jerome Powell told the House Financial Services Committee on Wednesday that he expects interest-rate cuts to come this year. In his testimony before the Senate Banking Committee today, he said interest rate cuts \"can and will begin\" this year.
Powell noted again that the central bank\'s policy-setting committee still isn\'t convinced that continued progress toward their 2% inflation objective is \"assured,\" and that it won\'t make sense to cut interest rates until it is confident.
Powell said that the inflation situation has \"eased notably\" over the past year, and the labor market remains \"relatively tight\" even as surging immigration has made more workers available.
A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits came in unchanged from an upwardly revised level in the week ended March 2nd. The report said initial jobless claims came in at 217,000, unchanged from the previous week\'s revised level.
Economists had expected jobless claims to come in unchanged compared to the 215,000 originally reported for the previous week.
Investors await U.S. non-farm payroll data, due on Friday. Economists currently expect employment to jump by 200,000 jobs in February after surging by 353,000 jobs in January, while the unemployment rate is expected to come in unchanged at 3.7%.
The ECB, which left the key interest rates unchanged, lowered inflation forecasts for this year and the next. The central bank expects inflation to average 2.3% this year, 2% in 2025 and 1.9% in 2026.
The dollar index dropped to 102.81, losing about 0.55%.
Against the Euro, the dollar weakened to 1.0947 from 1.0899. Against Pound Sterling, the dollar eased to 1.2810, losing more than 0.6%. At 148.02 yen a unit, the dollar was down sharply against the Japanese currency.
The Aussie gained against the dollar, firming to US$ 0.6621. Against Swiss franc, the dollar dropped to CHF 0.8775, and against the Loonie, it slid to C$ 1.3461 from C$ 1.3515.