US dollar perks up as month-end flows take center stage

The dollar index rose 0.5% on Thursday, boosted by month-end buying flows despite data signalling a slowing U.S. economy.

The US dollar gained ground, lifted by month-end buying flows despite economic data pointing to moderating inflation and a cooling jobs market in the United States. The dollar index climbed 0.5% to 103.40, putting it on course to post its strongest one-day increase in over a month.

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The gains came even as October’s PCE price index showed inflation remaining flat after September’s 0.4% climb, with the latest 12-month rate dropping to 3.0% from 3.4%. Additionally, while economists had forecast 226,000 new unemployment claims last week, the actual figure came in at 218,000, suggesting a slowing labor market. The data hints the Federal Reserve may soon pause its interest rate hikes or even start easing monetary policy by mid-2024.

Yet month-end dollar demand from investors squaring up positions appears to have outweighed concerns about the economic outlook.