After holding firm in the European session amid rising hopes the Fed will start tapering its stimulus measures from November, the U.S. dollar pared gains and stayed somewhat subdued on Thursday.

The currency fluctuated during the later part of the session today as traders reacted to comments from top Fed officials, including Chairman Jerome Powell, news about the Senators reaching a deal to avoid a government shutdown, and the latest data on U.S. GDP and jobless claims.

In a panel discussion at the ECB Forum on Central Banking, Fed Chair Jerome Powell said that inflation could remain elevated longer than previously thought due to supply chain problems.

Powell added that inflationary pressures could moderate when bottlenecks are resolved and the inflation rate would fall back to its longer run target of 2%.

Later, testifying before the House Financial Services Committee, Powell warned of upside risks to inflation.

Senate Majority Leader Chuck Schumer said that Senators have reached a deal to avoid a government shutdown on October 1. The legislation would keep the government funded through December 3 but does not raise the debt limit to prevent a default on obligations.

Data from the Commerce Department showed real gross domestic product shot up by 6.7% in the second quarter compared to the previously reported 6.6% spike. Economists had expected the jump in GDP to be unrevised.

a report from the Labor Department showed initial jobless claims unexpectedly increased for the third straight week in the week ended September 25th.

The report said initial jobless claims edged up to 362,000, an increase of 11,000 from the previous week’s unrevised level of 351,000. The uptick surprised economists, who had expected jobless claims to dip to 335,000.

The dollar index, which climbed to 94.50 in the European session, dropped to 94.11 a little before noon. Although it recovered to around 94.40 soon thereafter, it retreated again and was last seen at 94.25, down nearly 0.1% from the previous close.

Against the Euro, the dollar firmed to 1.1577, gaining from 1.1598.

The Pound Sterling strengthened against the dollar, fetching $1.3472 a unit, rising from $1.3416.

The Yen firmed up to 111.26 a dollar from 111.97.

Against the Aussie, the dollar weakened to 0.7228 from 0.7176.

The Swiss franc strengthened to 0.9317 against the dollar, gaining from 0.9345.

The Loonie firmed to 1.2680 a dollar, advancing from 1.2754 as oil prices moved higher.


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