CANBERA (dpa-AFX) - The U.S. dollar moved higher against its major counterparts during the European session on Thursday, as the nation's inflation accelerated more than expected in January, intensifying expectations that the Federal Reserve is likely to raise interest rate by half a percentage point in March.
Data from the Labor Department showed that the consumer price index climbed by 0.6 percent in January, matching the upwardly revised advance seen in December.
Economists had expected consumer prices to rise by 0.5 percent, matching the increase originally reported for the previous month.
With the slightly bigger than expected monthly increase, the annual rate of growth in consumer prices accelerated to 7.5 percent in January, the biggest spike since February of 1982.
The report showed core consumer prices, which exclude food and energy prices, also advanced by 0.6 percent in January, matching the increase seen in December. Economists had expected core prices to rise by 0.5 percent.
The annual rate of growth in core prices accelerated to 6.0 percent in January from 5.5 percent in December, showing the biggest jump since August of 1982.
Separate data showed that first-time claims for U.S. unemployment benefits dipped more than expected in the week ended February 5.
The report said initial jobless claims fell to 223,000, a decrease of 16,000 from the previous week's revised level of 239,000.
Economists had expected jobless claims to dip to 230,000 from the 238,000 originally reported for the previous month.
Cleveland Federal Reserve President Loretta Mester said on Wednesday that she did not believe there is a strong case for a 50 basis point rate hike in March.
The central bank is prepared to hike rates at any meeting, adding that if inflation is not coming down by the middle of the year then it could remove accommodation at a faster pace.
The currency held steady against its major counterparts in the Asian session, except the yen.
The greenback climbed to its highest level since January 6 against the yen, at 116.16. The pair had closed Wednesday's deals at 115.51. The greenback may face resistance around the 118.5 region, if it gains again.
Data from the Bank of Japan showed that Japan producer prices rose 8.6 percent on year in January - exceeding expectations for 8.2 percent and up from 8.5 percent in December.
On a monthly basis, producer prices climbed 0.6 percent - again topping forecasts for 0.4 percent following the 0.2 percent decline in the previous month.
The USD/CHF pair gained 0.5 percent, approaching a 10-day high of 0.9289. At yesterday's trading close, the pair was quoted at 0.9243. The greenback is likely to locate resistance around the 0.94 region.
The greenback added 0.4 percent to touch a 1-week high of 1.1375 against the euro. The pair was worth 1.1421 when it closed deals on Wednesday. Should the currency rallies again, 1.12 is possibly seen as its next resistance level.
The greenback touched a 2-day high of 1.3523 against the pound, up from yesterday's closing value of 1.3534. Further rally in the currency may challenge resistance around the 1.31 region.
The greenback rose to a 2-day high of 1.2719 against the loonie from yesterday's close of 1.2668. Next key resistance for the greenback is found around the 1.29 level.
In contrast, the greenback pulled back from its recent high of 0.7147 against the aussie, dropping to near a 3-week low of 0.7215. The greenback was worth 0.7178 per aussie at Wednesday's New York session close. The greenback may face support around the 0.75 region.
Data from the Australian Bureau of Statistics showed that Australia building permits climbed a seasonally adjusted 8.2 percent on month in December - coming in at 17,698.
That was in line with expectations and up from 2.6 percent in November.
The greenback reached as high as 0.6653 against the kiwi following the data, but it has since retreated to more than a 2-week low of 0.6723. At Wednesday's close, the pair was valued at 0.6680. On the downside, support is seen near the 0.68 level.
U.S. monthly budget statement for January are scheduled for release in the New York session.
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