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The U.S. dollar firmed against its major counterparts on Thursday on bets the Federal Reserve will keep interest rates unchanged for longer after data showed the central bank's preferred measure of inflation rose in line with expectations.
The Commerce Department report said the annual rate of consumer price growth decelerated to 3% in October from 3.4% in September. The slowdown matched expectations.
Core consumer price growth also slowed in line with estimates, slipping to 3.5% in October from 3.7% in September. Core consumer prices exclude food and energy prices.
The month-on-month PCE price index, which was seen dropping to 0.1%, from 0.4% in the previous month actually recorded a flat reading. The core component of the same reducing as expected to 0.2%, from 0.3% in the previous period.
The inflation readings, which are said to be preferred by the Federal Reserve, were included in the Commerce Department's report on personal income and spending during the month.
The report said personal income edged up by 0.2 percent in October after climbing by 0.4 percent in September. The uptick came in line with economist estimates.
Personal spending also increased in line with estimates, rising by 0.2 percent in October following a 0.7 percent advance in September.
A report released by the Labor Department showed initial jobless claims inched up 218,000 in the week ended November 25th, an increase of 7,000 from the previous week's revised level of 211,000.
Economists had expected jobless claims to rise to 220,000 from the 209,000 originally reported for the previous week.
The dollar index surged to 103.59, gaining more than 0.8%.
Against the Euro, the dollar firmed to 1.0890, gaining about 0.8%. The dollar strengthened to 1.2626 against Pound Sterling from 1.2694.
Against the Japanese currency, the dollar climbed higher, fetching 148.21 yen a unit. The Aussie weakened to US $0.6606. The dollar was up against Swiss franc at CHF 0.8752, and against the Loonie, it dropped to C$ 1.3562.
