The U.S. dollar edged lower in New York foreign exchange trading on Thursday, following the release of inflation data that tempered market expectations for further interest rate hikes. The Japanese yen continued to face downward pressure, hovering near cyclical lows.
The Bloomberg Dollar Spot Index declined 0.3% to 1,223.50.
The USD/JPY pair was largely flat at 161.79. A break above 161.95 would mark its highest level since 1986.
Naoki Tamura, one of the more hawkish members of the Bank of Japan's policy board, stated that interest rates need to be raised every few months, and the pace of hikes should accelerate in the face of mounting inflationary pressures.
The GBP/USD pair rose 0.2% to 1.3199.
The EUR/USD pair gained 0.1% to 1.1373.
A trade agreement between the European Union and the United States is set to take effect following final approval by the EU. Against the backdrop of ongoing economic tensions, the EU hopes the pact will inject some stability into the bilateral relationship.
The AUD/USD pair increased 0.1% to 0.6911, reversing a week-long decline.
Australian employment figures rebounded in May after a decline the previous month, while the unemployment rate fell. This data supports the Reserve Bank of Australia's assessment that the labor market remains tight.
The USD/CAD pair fell as much as 0.3% to 1.4198.
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