Dollar lower after initial claims, euro at one-month high

© Reuters. FILE PHOTO: U.S. one dollar banknotes are seen in front of displayed stock graph in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) - The dollar was weaker on Thursday following data on the labor market, while the euro remained near a one-month high versus the greenback in the wake of hawkish comments from European Central Bank policymakers.

Weekly initial jobless claims in the U.S. fell last week, and layoffs dropped to their lowest level in more than 24 years, hinting the labor market was continuing its recovery. Rising COVID-19 cases in recent weeks have brought on concerns the economic recovery could stall, keeping the Federal Reserve from pulling back on its massive stimulus.

"It was pretty much about what we have been seeing recently. It was better than expected but it wasn’t enough to change anyone’s views about what is going on, or the pace of tapering or what Friday’s number might be. It was just within the range of estimates," said Marshall Gittler, head of investment research at BDSwiss.

The data comes on the heels of a much weaker than expected ADP National Employment Report on Wednesday and ahead of Friday's key payrolls report for August. Nonfarm payrolls are expected to rise by 750,000, with the unemployment rate anticipated to dip to 5.2% from 5.4%, according to Reuters estimates.

The dollar has been subdued on uncertainty over the path of Fed policy. Fed chair Jerome Powell said last Friday that while tapering of its stimulus could begin this year, the central bank was in no hurry to do so.

"The payrolls would have to be far outside of expectations one way or the other for them to make any changes to their timing," said Gittler.

Other data showed new orders for U.S.-made goods rose in July, while business spending on equipment remained strong, despite supply constraints and spending trends moving away from goods towards services.

The dollar index fell 0.158% at 92.363, after falling as low as 92.333, its lowest level since August 6.

In contrast, data earlier this week showing inflation rose 3% in the euro zone for August has helped push the euro to a one-month high of 1.862, its highest since August 4.

Data in the region on Thursday showed manufacturing data remained strong but supply chain issues sent prices higher.

Recent comments from a host of European Central Bank hawks including Austria's Robert Holzman and Bundesbank boss Jens Weidman also served to move the single currency higher.

The euro up 0.15% to $1.1855.

The ECB is scheduled to hold a policy meeting on Sept. 9.

The Japanese yen weakened 0.06% versus the greenback at 110.05 per dollar, while Sterling was last trading at $1.3819, up 0.37% on the day.