* Fed rate rise, guidance strengthen dollar
* U.S. jobless claims, Philly Fed data push dollar higher
* Sterling flat after strong rise on BoE rate decision
(Updates with U.S. trading, changes dateline, previous LONDON)
By Dion Rabouin
NEW YORK, June 15 The dollar rose to its highest
in more than two weeks on Thursday as solid readings on the U.S.
economy helped strengthen the case for the Federal Reserve to
continue tightening monetary policy this year.
The number of Americans filing unemployment claims fell more
than expected last week, suggesting that slack in the labor
market was shrinking, and the Philadelphia Fed business
conditions index for June beat expectations after a strong
reading in May.
The Fed has maintained its monetary policy is data
dependent, meaning economic reports in line with its outlook are
necessary for it to continue raising rates.
The dollar index, which tracks the U.S. currency
against six major peers, rose to 97.557, its highest since May
The dollar also hit its highest against the euro,
Swiss franc and Swedish crown since May 30
following the data's release.
The greenback rose to a six-day high against the Japanese
yen of 110.64 yen.
"The Fed has pretty much reaffirmed its intent, absent any
pronounced deterioration, of continuing to normalize rates, to
raise once more this year," said Joseph Trevisani, chief market
strategist at WorldWideMarkets Online Trading. "And I think that
realization is starting to seep into the market right now."
The dollar already was trading higher ahead of the release
of U.S. economic data on Thursday in response to the Fed's
decision to raise U.S. overnight interest rates by 25 basis
points to a target range of 1.00-1.25 percent on Wednesday. The
Fed also gave its first clear outline of its plan to reduce its
$4.2-trillion portfolio of Treasuries and mortgage-backed bonds.
A Reuters poll of 21 of the 23 primary dealers that do
business directly with the Fed showed 14 of them now believed
the central bank would announce the start of its balance sheet
normalization at its Sept. 19-20 policy meeting. The rest of
them said it would make such a move at its Dec. 12-13 meeting.
"Long-term Fed expectations remain very much supported -
that is the main reason why the dollar is remaining supported
for now," Credit Agricole currency strategist Manuel Oliveri
Sterling was flat in North American trading after it
jumped more than a cent on signs of a shift in the Bank of
England's stance on keeping interest rates at record lows.
Two more policymakers at the Bank of England joined Kristin
Forbes in calling for a reversal to the BoE's interest rate cut
last August, sending the pound as high as $1.2795 in the minutes
following its decision to leave rates unchanged.
It was last little changed against the dollar at $1.2757.
(Reporting by Dion Rabouin; Editing by Andrea Ricci)