Euro Extends Recent Fall; U.S. Dollar Gains On Data, Powell Comments

Saudi riyal, yuan, Turkish lira, pound, U.S. dollar, euro and Jordanian dinar banknotes are seen in this illustration taken January 6, 2020. Reuters / Dado Ruvic

The euro extended recent declines against sterling and the dollar on Thursday as investors worried about the impact of rising oil prices after Russia's invasion of Ukraine, while the U.S. dollar index edged higher, with weekly U.S. jobless claim data suggesting the labor market was gaining steam.

The dollar also was supported by comments from Federal Reserve Chairman Jerome Powell. Powell is giving a second day of testimony to Congress, after saying on Wednesday that he would support a 25-basis-point hike at the Fed's March 15-16 meeting and said the Fed would be "prepared to move more aggressively" if inflation does not abate as fast as expected.

Earlier Thursday, data showed the number of Americans filing new claims for unemployment benefits dropped to their lowest level this year last week.

Investors are keen to see February's employment report on Friday, with economists anticipating another month of solid job growth.

The U.S. dollar index was last up 0.4%, and the dollar was up slightly against the yen.

"We're keeping our eyes on Fed Chairman Powell and non-farm payrolls tomorrow," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "For payrolls, certainly the data this week has been really bullish ... so if we see strong job growth coupled with oil exacerbating inflation, we think that would keep big Fed rate hikes in the conversation.

"The dollar is in a significant groove right now, benefiting from safe-haven flows and the solid shape of the U.S. economy," Manimbo said.

In other U.S. data, new orders for U.S.-made goods increased more than expected in January, pointing to continued strength in manufacturing.

Oil prices were down slightly after hitting an almost decade high earlier, supported by a fresh round of U.S. sanctions on the Russian oil refining sector. [O/R]

Russian and Ukrainian negotiators met on Thursday, and Kyiv said it would call for a ceasefire, as the conflict entered its second week.

"The Ukraine crisis has really lit a fire under oil, and we're showing how that's really becoming a source of significant weakness for the euro and a major source of strength for commodity currencies," Manimbo said.

The euro was down 0.5% at $1.1064 after hitting its lowest since May 2020 on Wednesday, and is headed for its fourth straight weekly fall against the U.S. dollar. Against sterling, the euro hit its lowest level against sterling since July 2016.

The Australian dollar was up 0.4% against the U.S. dollar.

The Russian rouble strengthened 0.17% versus the greenback to 103.91 per dollar.

The rouble slid to a fresh record low in Moscow trade after ratings agencies Fitch and Moody's downgraded Russia to "junk" status, citing the impact of Western sanctions.

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Currency bid prices at 10:47AM (1547 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

97.7430 97.4160 +0.35% 2.174% +97.7780 +97.3890

Euro/Dollar

$1.1064 $1.1119 -0.49% -2.67% +$1.1121 +$1.1058

Dollar/Yen

115.5700 115.5200 +0.05% +0.40% +115.8000 +115.4500

Euro/Yen