The US dollar ended Thursday with minimal changes, though it found some support from stronger-than-expected economic data. Weekly jobless claims dropped unexpectedly to a 3.5-month low of 189,000, signaling labor market resilience. Additionally, Q3 nonfarm productivity rose 3.6%, surpassing forecasts, while unit labor costs fell -0.7%, a positive sign for inflation. Hawkish remarks from Cleveland Fed President Beth Hammack also bolstered the dollar, as she emphasized the need for restrictive interest rates to curb inflation.
Despite these supportive factors, the dollar relinquished earlier gains due to lower T-note yields, which weakened its interest rate differentials. Concerns over potential political gridlock and stricter tech regulations following the Democrats' midterm election sweep further pressured the dollar.
In currency markets, EUR/USD fell -0.34%, while the yen gained ground amid safe-haven demand triggered by a 1.79% drop in the Nikkei Stock Index. However, yen gains were capped by a downward revision to Japan's October S&P services PMI and a 2% rise in crude oil prices, which could negatively impact Japan's energy-dependent economy.
Precious metals closed higher, with December COMEX gold (GCZ26) rising +40.50 (+0.99%) and December COMEX silver (SIZ26) up +0.094 (+0.18%). The stock market slump boosted safe-haven demand for these metals, while the Democratic sweep in the midterms added support by potentially restraining fiscal policies that could weigh on the dollar. However, gains were limited by the Bank of England's rate hike and Hammack's hawkish comments.