WASHINGTON (dpa-AFX) - The U.S. dollar drifted lower on Thursday, extending losses from the previous session, with traders reacting to the policy announcements from the Fed, the European Central Bank and the Bank of England.
The Bank of England today raised its key interest by 0.15 percentage points as policymakers viewed that some moderate tightening is required to bring inflation down. The committee unanimously decided to maintain the bond purchase programme at GBP 895 billion.
The European Central Bank today announced a reduction in support for the euro zone economy by another notch but promised copious support for 2022. The bank also indicated that any exit from years of ultra-easy policy will be slow.
ECB President Christine Lagarde said policymakers are unlikely to raise interest rates next year after the bank unveiled plans to start tapering its stimulus in March.
Inflation is seen slowing to 1.8% in 2023 versus the earlier forecast of 1.5%. The inflation estimate for this year was lifted to 2.6% from 2.2%.
Eurozone inflation forecast for next year was raised sharply to 3.2 percent from 1.7 percent, the latest set of ECB staff macroeconomic projections unveiled by Lagarde showed.
On Wednesday, the Federal Reserve held its rates and said it would double the speed of the tapering of its bond purchasing program and projected three rate hikes in 2022.
Traders also digested the latest back of data from the U.S. Data from the Labor Department showed initial jobless claims rose to 206,000, an increase of 18,000 from the previous week's revised level of 188,000.
The Fed also released a report showing U.S. industrial production increased by 0.5% in November after surging by an upwardly revised 1.7% in October.
A separate report from the Commerce Department showed housing starts and building permits both surged by much more than expected in the month of November.
The Dollar Index, which dropped to 95.85 earlier in the day, is at 95.99, down more than 0.5% from the previous close.
Against the Euro, the dollar weakened to $1.330 from $1.1291.
Against Pound Sterling, the dollar drifted down to $1.3323 from Wednesday evening's level of $1.3262.
The dollar traded at 113.70 yen, down from around 114.05.
The dollar closed at 0.714 against the Aussie. The Swiss franc settled at 0.9194 a dollar, easing from 0.9246.
Against the Loonie, the dollar dropped to C$1.2776 from around $1.2835, as oil prices rose sharply on renewed hopes about energy demand.
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