Dollar holds gains after strong data; euro rises

NEW YORK (Reuters) – The dollar rose on Thursday against a gift basket of currencies it fell around the euro, as solid labour and housing data backed the truth for strong U.S. economic growth.

The euro fell early after a press conference from European Central Bank chief Mario Draghi who pointed to sagging inflation and also need for further monetary policy assistance in Europe.

The ECB announced it is going to maintain its negative interest rate policy and continue its record pace of asset purchases to stimulate tepid growth.

The euro fell below $1.06 during Draghi’s speech, when he described the euro zone recovery as “dampened because of the sluggish pace of structural reform” and said a “very substantial degree” of economic policy stimulus had been needed.

The euro recovered as investors parsed Draghi’s statement and noted that no changes to policy seemed to be announced. The continental currency was last up 0.25 % at $1.0658.

“It was subsequently all huffing and puffing by Mr. Draghi,” said Axel Merk, president and portfolio manager at Merk Hard Currency Fund in Palo Alto, California. “He used his credibility to achieve the euro lower for a couple of hours. In my opinion, that’s short-sighted and the result is that the euro is bouncing back a few things.”

The euro’s rebound can have been aided by technical factors, said Sireen Harajli, currency strategist at Mizuho.

“In most situations when currencies weaken so much you get this get better afterward like a reaction,” she said, adding she expects further weakness of your euro.

The dollar remained higher ensure that, holding onto modest gains around the Canadian dollar and Japanese yen and bolstered by rosy reports on U.S. jobless claims and housing starts.

The Labor Department reported numerous Americans submitting unemployment benefits a while back fell into the lowest levels in decades, although the Commerce Department said homebuilding jumped around expected in December.

The dollar rose into a nearly one-week high up against the yen as investors laid bets on further dollar strength. The greenback gone to 115.29 yen, its highest since Jan. 13. It has been last up 0.15 % to 114.82 yen.

The dollar rose 0.Four percent against the Canadian dollar to C$1.332.

The dollar index, which tracks the greenback versus the euro, yen, Canadian dollar and three other major currencies, was last up 0.Twenty-five percent at 101.170.