WASHINGTON (dpa-AFX) - The U.S. dollar climbed higher against most of its major counterparts on Thursday as treasury yields spiked amid rising expectations the Federal Reserve will hike rates as early as March.
The minutes of the Federal Reserve's latest policy meeting indicated that the central bank is prepared for earlier and faster rate hikes in the wake of an improvement in the labor market and elevated inflation pressures.
'Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,' the minutes stated.
Policy makers also agreed to accelerate tapering of bond purchases and end it in March.
The data on U.S. non-farm payrolls, due out on Friday, is expected to provide more clues about the likely timing of rate hikes.
A report released by the Labor Department this morning showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 1st.
The report showed initial jobless claims crept up to 207,000, an increase of 7,000 from the previous week's revised level of 200,000. Economists had expected jobless claims to edge down to 197,000 from the 198,000 originally reported for the previous week.
A separate report from the Institute for Supply Management showed U.S. service sector growth slowed from a record high in the month of December.
The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Economists had expected the index to drop to 66.9.
The dollar index, which advanced to 96.39 in the European session, dropped to 96.04 later in the day before edging up to 96.26, gaining about 0.1%.
Against the Euro, the dollar firmed to $1.1298 after having weakened to $1.1333.
The dollar is trading at $1.3536 against Pound Sterling, gaining from $1.3556, and 115.86 yen, about 0.22% less than Wednesday's closing level of 116.11 yen.
Against the Aussie, the dollar is at $0.7164, firming from $0.7221.
The Swiss franc is weak against the dollar at CHF 0.9213, easing from CHF 0.9174.
Against the Canadian currency, the dollar is weak, fetching C$1.2728 a unit, compared with C$1.2758 on Wednesday.
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