NEW YORK (Reuters) – The U.S. dollar experienced a drop in volatile trading on Thursday, losing momentum after an earlier boost from strong U.S. economic reports, while the Swiss franc gained ground following a 25-basis-point rate cut by the Swiss central bank.
The dollar initially trimmed its losses as fresh data revealed U.S. jobless claims fell by 4,000, reaching a four-month low of 218,000, a figure lower than the predicted 225,000 by economists surveyed by Reuters.
Additional reports showed stronger-than-expected corporate profit growth in the second quarter, with GDP expanding at a steady 3% rate. Furthermore, new orders for key U.S. capital goods unexpectedly increased in August, though business investments in equipment appeared to slow during the third quarter.
“We’re seeing a divergence between the Federal Reserve cutting rates and an economy that’s growing at around 3%,” commented Joseph Trevisani, a senior analyst at FXStreet in New York. “The market seems uncertain about this dynamic. If cutting rates doesn’t hurt, it could help, so it makes sense to proceed.”
The dollar index, which tracks the U.S. dollar against a basket of other currencies including the euro and yen, fell 0.42% to 100.52. This marked its sixth decline in seven sessions, despite an earlier rise to 100.95. Meanwhile, the euro advanced 0.41% to $1.1178.
Swiss Franc Surges After Rate Cut
The U.S. dollar slipped 0.55% to 0.846 against the Swiss franc, following the Swiss National Bank’s decision to cut interest rates by 25 basis points. This move echoed recent cuts from the Federal Reserve and European Central Bank and signaled the possibility of further reductions as inflation continues to cool. The decision, however, fell short of expectations from some market observers who had anticipated a deeper cut.
Goldman Sachs analysts attributed the SNB’s rate cut to easing inflationary pressures, influenced by a stronger franc and other factors. They predicted another 25-basis-point reduction at the bank’s upcoming December meeting, based on the SNB’s dovish tone and revised inflation forecasts.
Several U.S. Federal Reserve officials spoke on Thursday, though Fed Chair Jerome Powell did not comment on monetary policy. U.S. Treasury Secretary Janet Yellen highlighted that current data on inflation and employment pointed to a “soft landing” for the economy, but noted that bringing down housing costs remains crucial.
Elsewhere, the Japanese yen strengthened by 0.1% against the dollar, settling at 144.6. Minutes from the Bank of Japan’s July meeting revealed internal divisions over the pace of future rate hikes, underscoring the uncertainty around when borrowing costs will increase.
The British pound rose 0.71% to $1.3417, marking its largest daily gain in a month.
