The greenback edged higher against the euro in the Thursday session rising to 1.5468 on the heels of a pullback in oil prices. Prompting the retreat in oil were reports that China would raise retail prices for gasoline by 17% -- sending contracts for WTI crude to $132.50 per barrel. Nonetheless, the major currency pairs have remained confined within ranges as traders continue to gauge the direction of global interest rate differentials.

With markets largely expecting the ECB to hike rates by 25-basis points in July to 4.25%, the focus will be on the timing of the FOMC's next move. Fed fund futures are currently pricing in a 50% probability for a 25-basis point rate hike by the August meeting. Meanwhile, the SNB left its monetary policy unchanged when it announced its decision overnight with Bank President Roth saying "there is enough reason to suggest the current inflationary trend is of a transitory nature".

US economic reports released in the Thursday session included weekly jobless claims, the June Philadelphia Fed survey and May leading indicators. The weekly jobless claims number fell to 381k versus 384k from the previous week while the May leading economic indicators held steady from a month prior at 0.1%. However, the Philadelphia Fed survey reflected continued weakness in manufacturing with the report deteriorating to minus 17.1 and missing estimates for an improvement to minus 12.0 from minus 15.6.

Sterling Edges Higher

The sterling firmed against the euro and dollar benefitting from higher than expected retail sales data. The May retail sales figures posted steep gains and sharply exceeded forecasts, up 3.5% compared with a 0.2% decline a month earlier and surging to 8.1% versus 4.2% in the previous year. The report revealed retail sales at its strongest levels since 1986 - sending the pound to 0.7846 versus the euro and 1.9742 against the dollar.