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Most of the U.S. currency's gains came against the commodity
linked currencies such as the Australian dollar <AUD=D3> and its
Canadian counterpart <CAD=D3>, a theme that has been consistent
this week, as investors took profits after recent gains.
For example, Brown Brothers Harriman strategists noted that the
U.S. dollar rose to a 20-day moving average against its Canadian
rival on Thursday, a level it hasn't traded above since early
June.
On a broader trade-weighted basis, however, the dollar index <.DXY>,
which measures its value against a basket of six major
currencies, rose about 0.2 percent to 93.02. On Wednesday, it
slid to 92.548, its weakest since May 2016.
"Despite today's bounce and the heavy positions the dollar can
go lower, with any signs of improvement in the euro zone economy
likely to push euro/dollar above the 1.20 line," Michael Hewson,
chief market analyst at CMC Markets.
Despite double-digit U.S. earnings growth in the second quarter
and private sector payroll growth last month of another 178,000,
expectations of a third Federal Reserve interest rate rise have
dissipated. Futures markets now only see a 35 percent chance of
another hike by the end of 2017.
The dollar's decline has pushed the euro higher <EUR=EBS> with
the single currency hitting a 2-1/2-year high of 1.1910 against
the dollar on Wednesday. It was trading a shade below that at
$1.1842 on Thursday.
Despite the single currency's more than 12.5 percent rise
against the dollar this year, a Reuters poll found risks still
skewed more in favor of the single currency, driven by
expectations the European Central Bank will start to scale back
its stimulus program.
The poll of more than 60 foreign exchange strategists showed the
euro will weaken slightly in the coming year but is expected to
close 2017 higher than where it started.
Sterling <GBP=D3> slumped 0.6 percent to the day's lows at
$1.3145 after the Bank of England kept interest rates at a
record low once again on Thursday and trimmed its forecasts for
economic growth both this year and next.
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