Investing.com - The U.S. dollar held firm against a basket of major currencies on Thursday, after positive U.S. labor market data added to expectations that the Federal Reserve may hike interest rates in March.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.41% to 102.15.
Growing expectations that the Federal Reserve may hike interest rates at its next meeting in March continued to provide the platform for a broad based dollar rally while better-than-expected U.S. jobless claims data supported the narrative of a robust U.S. economy equipped to handle a period of monetary policy tightening.
Initial jobless claims fell by 19,000 to 223,000 for the week ended February 25, the Labor department said on Thursday. Analysts expected jobless claims to rise by 1,000 to 243,000 last week.
According to investing.com’s Fed rate monitor tool, nearly 80% of traders expect a rate hike in March, compared to just over 60 percent on Wednesday.
Market participants look ahead to Friday for further clues on monetary policy, as Fed Chair Janet Yellen and Vice Chair Stanley Fischer are both due to speak.
GBP/USD declined 0.2% to $1.2264, despite a better-than-expected UK Construction Purchasing Index (PMI) read in February.
Markit said its UK construction PMI rose to 52.5 in February compared to economists’ forecasts for a 52.2 reading.
EUR/USD retreated 0.35% while EUR/GBP was largely unchanged at 0.8568.
USD/CAD hit a 5-month high at $1.3385 earlier during the session, after Statistics Canada reported on Thursday that the country’s gross domestic product rose 0.3% in December, in line with expectations.
Elsewhere the dollar added to gains against the yen, with USD/JPY up 0.69% to 114.52.