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© Reuters
By Geoffrey Smith
Investing.com -- The dollar rose in early trade in Europe on Thursday, after a top Federal Reserve official warned that the U.S. central bank isn't close to ending its cycle of interest rate hikes yet.
By 03:05 ET (07:05 GMT), the dollar index, which tracks the greenback against a basket of six advanced economy currencies, was flat at 110.97, after falling nearly 3% in the last week from what was a 20-year high.
Atlanta Fed President Raphael Bostic said that the U.S. policy tightening cycle is "still in its early days" and warned explicitly against betting on an early 'pivot'.
Despite "glimmers of hope" in recent data, Bostic said "the overarching message I’m drawing...is that we are still decidedly in the inflationary woods, not out of them,"
That warning assumed a greater significance after the Organization of Petroleum Exporting Countries and its allies (chiefly Russia) acted to keep oil prices high by announcing a big cut in their output from next month. High energy prices have been one of the strongest forces driving the global wave of inflation over the last year.
Bostic hasn't been the only Fed official to push back against speculation on a pivot, with San Francisco's Mary Daly making similar comments on two occasions this week alone, despite a big drop in job vacancies that pointed to some cooling off in a red-hot labor market.
More hard data from the labor market are due at 08:30 ET with the release of weekly U.S. jobless claims, but the market will get its marching orders for the next week from Friday's official labor market report on Friday.
On the European crosses, the euro edged higher to 0.9905 after a big upward revision to German manufacturing orders in July, which suggested that the Eurozone economy will continue to enjoy some support from the easing of supply chain bottlenecks, despite its familiar problems with rising energy costs.
The pound also edged up 0.2% to $1.1349, despite what was widely seen as an unconvincing keynote speech by new Prime Minister Liz Truss on Wednesday that left plenty of questions about the sustainability of her fiscal policy unanswered.
The Polish zloty, meanwhile, continued to weaken after the National Bank of Poland surprisingly left its key rate at 6.75% at its monthly meeting on Wednesday, breaking a sequence of 11 straight increases.
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