The dollar hovered against the euro on Thursday after the effect of a weaker than expected jobless claims and a stronger import prices report proved broadly neutral for the U.S. currency. The prices of goods imported into the United States rose much more than expected in May as oil costs posted the largest increase since early 2003. Import prices rose to 1.6 percent in May from 0.2 percent the previous month. Economists were expecting a 0.8 percent rise. Meanwhile, the number of Americans filing initial claims for jobless aid rose unexpectedly last week. First-time claims for state unemployment benefits rose 12,000 to 352,000 the week ended June 5. Wall Street had forecast a fall in claims to 335,000 from a revised 340,000 the previous week. By early morning in New York, the euro traded up 0.1 percent at $1.2054 after having touched a 2-1/2 week low earlier in the global day at $1.2024 .
"We had claims higher than expected and import prices well above expectations. While rising inflation implies higher interest rates, we are close to the limit of that benefiting the dollar, because it raises the danger that the Fed might be a little bit behind the curve, and might clamp down on growth more than they would like," said Sean Callow, currency strategist, IDEAglobal, a Wall Street research firm. The chief focus remained renewed expectations that the U.S. Federal Reserve would be more aggressive in raising rates than anticipated even after an expected hike at the end of June. Fed officials including chairman Alan Greenspan said this week the bank would do what is required to keep inflation in check. The Fed next meets on June 29-30. U.S. rates are at 46-year lows of 1.0 percent and have been a contributor to dollar weakness over the past year.///