Forex. Dollar index pares losses, re-approaches 4-month peak

Investing.com - The dollar pared losses against the other major currencies on Thursday, as strong U.S. housing sector data lent support and as upbeat remarks by European Central Bank President Mario Draghi failed to sustainably ease global growth concerns.

Data showed that U.S. existing home sales increased by 1.1% in June to 5.57 million units from the 5.51 million units in May that was revised from the initial read of 5.53 million. The consensus forecast was for a 0.5% decline to 5.48 million units.

The report came after the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 16 fell by 1,000 to 253,000 from the previous week’s total of 254,000. Analysts expected jobless claims to increase by 11,000 to 265,000 last week.

Separately, the Federal Reserve Bank of Philadelphia said that its manufacturing index fell to -2.9 this month from June’s reading of 4.7. Analysts had expected the index to improve to 5.0 in July.

EUR/USD slipped 0.14% to trade at 1.0999, re-approaching Wednesday’s one-month low of 1.0979.

At the conclusion of its policy meeting, the ECB left its benchmark interest rate unchanged at a record-low 0.0%, in line with forecasts.

Commenting on the decision, ECB President Mario Draghi said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats.

Darghi also said that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

GBP/USD edged down 0.10% to 1.3191. The U.K. Office for National Statistics earlier said that retail sales dropped 0.9% in June, compared to expectations for a 0.6% fall. Year-on-year, retail sales increased by 4.3%.

Core retail sales, which exclude automobiles, fell 0.9% last month, confounding expectations for a 0.6% decline.

However, a separate report on Thursday showed that U.K. public sector net borrowing fell to £7.31 billion in June from an upwardly revised total of £9.41 billion the previous month. Analysts had expected public sector net borrowing to hit £9.20 billion last month.

USD/JPY declined 0.67% to 106.16, off a seven-week high of 107.48 hit overnight, whileUSD/CHF added 0.16% to 0.9889.

The yen slightly recovered on Thursday, but remained under pressure amid mounting expectations for additional monetary easing by the Bank of Japan in its monetary policy statement next week.

The Australian dollar remained higher, with AUD/USD up 0.31% at 0.7496, while NZD/USDdropped 0.58% to 0.6980 after the Reserve Bank of New Zealand said that "further easing is likely", sparking expectations for a rate cut at its next policy meeting.

Elsewhere, USD/CAD eased 0.10% to trade at 1.3044.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 97.15, off session lows of 96.77 and re-approaching the previous session’s four-month high of 97.37.