The U.S. dollar gained against most major currencies on Thursday amid continued optimism about growth in the world’s largest economy.
The outbreak of the coronavirus in China and the European Central Bank’s decision to hold its key rates and asset purchasing program unchanged supported dollar’s rise.
The dollar index started off on a subdued note, but gained in strength and rose to 97.80 in late morning trades before paring some gains subsequently. Still, at 97.67, the index was up 0.15% around late afternoon.
The Euro dropped to $1.1037 after the ECB held its key interest rates, asset purchases and forward guidance unchanged and announced the launch of a review of its monetary policy strategy.
The bank said that risks surrounding the euro area growth outlook remain tilted to the downside.
In her post meeting press conference, Lagarde said, “The review will have to do with how we deliver, how we measure, how we communicate when it comes to decision making, publication, outreach.”
“We cannot operate as we did back in 2003, which doesn’t mean to say that we have to change this, that and the other, but we have to look comprehensively at the effectiveness of our monetary policy,” she added.
The dollar is up by about 0.15% against Pound Sterling, at $1.3123.
The yen was in demand on safe-haven appeal amid mounting worries about the impact of the coronavirus. The yen, which strengthened to 109.27 a dollar, was trading at 109.47 a dollar late afternoon.
The dollar was up against Swiss franc at 0.9692 and marginally down against the loonie at 1.3127.
Against the Aussie, the dollar was little changed with the pair trading at 1.3127.
In U.S. economic news, data from the Labor Department showed first-time claims for U.S. unemployment benefits rose to 211,000, an increase of 6,000 from the previous week’s revised level of 205,000.
Economists had expected jobless claims to climb to 215,000 from the 204,000 originally reported for the previous week.
The Conference Board released a report showing a slightly bigger than expected decrease by its index of leading U.S. economic indicators.
The Conference Board said its leading economic index fell by 0.3% in December after inching up by a revised 0.1% in November
Economists had expected the leading economic index to dip by 0.2% compared to the unchanged reading originally reported for the previous month.
Traders were also tracking news about the coronavirus outbreak in China that has spread from Wuhan to several Chinese provinces.
According to reports, deaths from the virus rose to 17 on Wednesday, with nearly 600 cases confirmed. Market participants remain worried about the contagion as the week-long Lunar New Year holidays starts on Friday, when millions of Chinese travel domestically and abroad.
The World Health Organization said today that it is still too early to declare the outbreak a Public Health Emergency of International Concern has somewhat eased worries about the virus a bit.
“Make no mistake, this is an emergency in China. But it has not yet become a global health emergency,” said WHO Director-General Tedros Adhanom Ghebreyesus.
“At this time, there is no evidence of human-to-human transmission outside China, but that doesn’t mean it won’t happen,” Tedros said.