The dollar index increased overnight, jumping from a 2-1/2 month low, after economic data showed the number of Americans filing new claims for unemployment benefits dropped more than expected last week
Currency markets were calmed by holidays in Japan and the US on Thursday, leaving the U.S. dollar revelling in its gains after data that cast doubts over market projections for peak Fed rates.
With markets closed in Japan and the US for the Thanksgiving holiday, currencies barely moved and cash U.S. Treasuries were not traded in Asia.
The dollar index increased overnight, jumping from a 2-1/2 month low, after economic data showed the number of Americans filing new claims for unemployment benefits dropped more than expected last week.
At the same time, orders for long-lasting U.S. manufactured goods dropped more than expected in October, indicating an economy cooling considerably following strong Q3 growth.
In another worrying indicator for the Fed, a survey from the University of Michigan showed consumers this month expect higher inflation both in the near and long term, especially inflation over the next five years.
The dollar has partially bounced back after recent weakness, markets are  reminded from the University of Michigan survey that inflation expectations for the next 1 and 5 years stay sticky, and that rates could stay higher for longer, said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corporation.
The dollar’s bounce back comes after a three-week long spell of weakness driven by evidence of a slowing economy and disinflation, leading markets to price out any additional Fed rate hikes. U.S. Treasuries had rallied too, with 10-year Treasury yields up around half a percentage point this month.
The dollar index was just 0.03 per cent down at 103.84, with the euro unchanged at $1.0887. The Australian dollar was flat too at $0.654.
