The dollar index rebounded above 113 on Thursday after tumbling more than 1% in the previous session, heading back towards its highest levels in two decades after fresh data showed weekly claims fell to a 5-month and PCE prices were revised higher in Q2.
Meanwhile, the American economy was confirmed to have contracted 0.6% in Q2.
Hawkish remarks from Federal Reserve officials and the rejection of a possible currency agreement among major economies also supported the dollar.
Throughout the week, a chorus of Fed policymakers indicated the central bank’s determination to do what is necessary to bring down inflation, even at the risk of a recession and further market volatility.
Meanwhile, White House National Economic Council Director Brian Deese rejected the idea of another 1985-type currency accord to weaken the dollar, and added that the US economy’s relative strength was a significant factor driving the dollar higher.
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