NEW YORK (Reuters) - The dollar rose on Thursday against a basket of currencies even though it fell against the euro, as solid labour and housing data backed the case 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 the need for further monetary policy assistance in Europe.
The ECB announced it would 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, in which he described the euro zone recovery as “dampened by the sluggish pace of structural reform” and said a “very substantial degree” of monetary policy stimulus was still needed.
The euro recovered as investors parsed Draghi’s statement and noted that no changes to policy had been announced. The continental currency was last up 0.25 percent at $1.0658.
“It was 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 get the euro lower for a couple of hours. To me, that’s short sighted and the result is that the euro is bouncing back a little bit.”
The euro’s rebound may also have been aided by technical factors, said Sireen Harajli, currency strategist at Mizuho.
“A lot of times when currencies weaken so much you get this bounce back afterward as a reaction,” she said, adding that she expects further weakness from the euro.
The dollar remained higher on the day, holding onto modest gains against the Canadian dollar and Japanese yen and bolstered by rosy reports on U.S. jobless claims and housing starts.
The Labor Department reported the number of Americans filing for unemployment benefits last week fell to the lowest levels in decades, while the Commerce Department said homebuilding jumped more than expected in December.
The dollar rose to a nearly one-week high against the yen as investors laid bets on further dollar strength. The greenback moved to 115.29 yen, its highest since Jan. 13. It was last up 0.15 percent to 114.82 yen.
The dollar rose 0.4 percent against the Canadian dollar to C$1.332.
The dollar index, which tracks the greenback against the euro, yen, Canadian dollar and three other major currencies, was last up 0.25 percent at 101.170.
Editing by Bernadette Baum and David Gregorio
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