Dollar Rallies after Draghi Signals Normalization Would Be Gradual

The U.S. Dollar rose against a basket of major currencies with the exception of the Canadian Dollar on Thursday. The rally was primarily driven by a nearly 1 percent drop in the Euro.

March U.S. Dollar Index futures settled at 90.156, up 0.549 or +0.61%.

On Thursday, the European Central Bank (ECB) dropped its easing bias, fueling expectations that it will normalize monetary policy in the Euro Zone.

ECB President Mario Draghi said Thursday that the solid economic recovery in the region supported the decision to remove the so-called easing bias.

“Incoming information…confirms the strong and broad-based growth momentum in the Euro Area economy, which is projected to expand in the near-term at a somewhat faster pace than previously expected,” Draghi said.

Late in the session, President Trump imposed import tariffs on steel and aluminum, while softening his stance by announcing exemptions for Canada and Mexico, and leaving open the chance for other countries to obtain their own. This helped boost the Canadian Dollar and Mexican Peso.

U.S. Economic News

In the U.S., Challenger Job Cuts fell 4.3%, down from the previous -2.8%. Weekly Unemployment Claims rose to 231K, higher than the 220K forecast and 210K previous read.

Gold

Gold prices fell on Thursday as the U.S. Dollar rebounded from near a three-week low against the Euro after ECB President Mario Draghi signaled that any policy normalization in the Euro Zone would be very gradual. The Euro gave up all of its early gains against the dollar to finish lower after Draghi said monetary policy would remain “reactive” and that measures of underlying inflation were still subdued.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil finish lower on Thursday, led by several factors including signs of an inventory build at the U.S. futures delivery hub in Cushing, Oklahoma, surging U.S. crude production and investor concerns about a potential trade war.

Natural Gas

Natural gas prices finished lower on Thursday after the U.S. Energy Information Administration reported that domestic supplies of natural gas fell by 57 billion cubic feet for the week-ended March 2.