Investing.com - The dollar rose to nine-month highs against a basket of other major currencies on Thursday after data showed that the U.S. employment cost index rose at the fastest rate since September 2008 in the second quarter.
The dollar added to recent strong gains after the Labor Department reported that the employment cost index rose by 0.7% in the three months to June after a 0.3% increase in the first quarter. Economists had expected a 0.5% gain.
Wages rose by 0.6% in the second quarter the report said.
At the same time, the Labor Department said the number of people who filed for unemployment assistance in the U.S. last week rose by 23,000 to 302,000 from the previous week’s total of 279,000. Analysts had expected jobless claims to rise by 22,000 to 301,000.
The reports came one day after official data showed that the U.S. economy rebounded more strongly than expected in the second quarter, fuelling speculation over the timing of a possible U.S. rate hike.
Investors were awaiting the U.S. nonfarm payrolls report for July on Friday, after the Federal Reserve said Wednesday that considerable slack still remains in the labor market despite recent improvements in jobs growth.
The euro fell to fresh eight month lows against the dollar, with EUR/USD slipping 0.13% to 1.3378.
Earlier Thursday, official data showed that the annual rate of inflation in the euro area slowed to a five year low of 0.4% in July from 0.5% in June, adding to pressure on the European Central Bank to implement further stimulus measures to shore up growth and stave off the threat of deflation in the currency bloc.
A separate report showed that the unemployment rate across the euro area fell to 11.5% in June from 11.6% last month. It was the lowest rate since September 2012.
USD/JPY eased up 0.11% to an almost three month high of 102.93, while USD/CHF was close to six month peaks at 0.9094.
Sterling fell to fresh one-and-a-half month lows, with GBP/USD down 0.27% to 1.6866.
The Australian, New Zealand and Canadian dollars were at multi-month lows, with AUD/USD losing 0.42% to trade at 0.9290, NZD/USD sliding 0.11% to 0.8481 and USD/CAD rising 0.19% to 1.0918.
The Canadian dollar shrugged off data showing that the country's domestic gross domestic product grew 0.4% in May, ahead of forecasts of 0.3%, bringing the annual rate of growth to 2.3%.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, touched highs of 81.66, the most since September 12.