WASHINGTON (dpa-AFX) - The U.S. dollar climbed higher on Thursday, scoring strong gains against most of its major counterparts, amid rising U.S. treasury yields after the Federal Reserve signaled it would start raising interest rates in March.
The central bank also indicated aggressive policy tightening in the subsequent meetings this year. Chairman Jerome Powell said the bank has 'quite a bit of room' to raise interest rates without threatening the labor market.
The Fed chief refused to rule out hiking rates at every meeting, raising the possibility of more than three hikes by the end of 2022.
In its statement, the Fed said that it would be appropriate to raise rates soon in the wake of high inflation and a strong labor market.
'With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,' the statement said.
Markets expect the central bank might raise its policy rate by 50 basis points by May.
In economic news today, data from the Commerce Department showed real gross domestic product spiked by 6.9% in the fourth quarter after jumping by 2.3% the third quarter. Economists had expected GDP to surge up by 5.5%.
Economists had pointed out the strong GDP growth was primarily due to a massive surge in business inventories, which added 4.9 percentage points, the second largest contribution since 1987.
The Labor Department's report showed initial jobless claims pulled back in the week ended January 22nd following a bigger than expected increase in the previous week.
The report said initial jobless claims fell to 260,000, a decrease of 30,000 from the previous week's revised level of 290,000. Economists had expected jobless claims to drop to 260,000 from the 286,000 originally reported for the previous week.
Meanwhile, separate reports from the Commerce Department and the National Association of Realtors showed steeper than expected drops in durable goods orders and pending home sales in the month of December.
The dollar index rose to 97.29, gaining more than 1.4%.
Against the Euro, the dollar firmed to $1.1146 from $1.1241.
The dollar is trading at $1.3381 against Pound Sterling, gaining from Wednesday's close of $1.3465.
The dollar is up against the Yen as well, climbing to 115.37 yen a dollar, from 114.68 yen.
Against the Aussie, the dollar is at 0.7032, gaining nearly 1.2% from 0.7115.
The Swiss franc has weakened to 0.9314 a dollar, easing from 0.9240, and the Loonie is at C$1.2743 a dollar, compared with C$1.2668 Wednesday evening.
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