Investing.com - The dollar remained supported against the other major currencies on Thursday as robust U.S. services data and comments by a Federal Reserve official underpinned expectations for higher interest rates.
USD/JPY was steady at 124.88, not far from Wednesday’s two-month highs of 125.00.
The dollar strengthened after data on Wednesday showed that activity in the U.S. service sector expanded at the fastest rate in ten years last month.
The Institute of Supply Management said its non-manufacturing purchasing manager's index rose 60.3 last month from 56.0 in June, well above forecasts for a reading of 56.2.
The upbeat report reinforced expectations that the Fed will raise rates in the coming months, possibly as early as September.
On Tuesday, comments by Atlanta Fed President Dennis Lockhart fueled expectations for an imminent lift off after he said it would take a “significant deterioration in the economic picture” for him to not support a rate hike in September.
Economic reports earlier on Wednesday had showed that U.S. private sector hiring slowed sharply in July while the trade deficit widened in June.
The ADP nonfarm payrolls report showed that the U.S. private sector added just 185,000 jobs in July, which was the smallest increase since April. The data dampened expectations for a strong reading in Friday’s government nonfarm payrolls report.
The Fed has said that a strengthening labor market is a key factor in deciding on the timing of a first rate increase.
The dollar was close to two-week highs against the euro, with EUR/USD easing 0.11% to 1.0892.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was firm at 98.05, close to Wednesday’s three-and-a-half month highs of 98.33.