Forex

Dollar consolidates gains ahead of release of US jobless data

Reuters London | Updated on April 16, 2020 Published on April 16, 2020

The dollar consolidated its gains against other currencies on Thursday before the release of weekly US jobless data, which are likely to provide more evidence of a deep recession in the world's biggest economy.

The dollar edged up 0.1 per cent to 99.774 against a basket of major currencies, after snapping a four-day losing streak the previous day as equity market gains hit a wall.

However, stabilising oil prices and some improvement in risk sentiment on stock markets helped temper the dollar's gains.

Economists forecast US weekly jobless claims of 5.1 million, lifting total filings during the crisis above 20 million.

Dire US retail and factory data and a nosedive in oil prices to 18-year lows on Wednesday strengthened the dollar across the board.

“The latest economic releases yesterday confirmed that the COVID-19 shock has sent the US economy into free-fall,” analysts at MUFG said in a note.

US President Donald Trump is due to announce guidelines on re-opening the country's economy at a press conference later on Thursday, which could also boost market sentiment.

The euro resumed its fall versus the dollar, down a quarter of a per cent at $1.0882.

A half-trillion-euro compromise deal struck between euro zone governments last week to support countries through the coronavirus outbreak may prove insufficient, especially for debt-laden Italy, analysts say.

“The market has finally come to the conclusion that what the euro group delivered was not enough,” said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

“This shows that the ECB (European Central Bank) is still in a permanent role to prevent a Eurozone crisis, which is not a good situation to be in.”

The yen also fell a quarter of a per cent against the dollar, as media reports suggested Japan was preparing to extend a state of emergency beyond major cities to the entire nation.

The dollar gained against currencies considered riskier bets, edging up against the British pound and Australian and New Zealand dollars.

Oil currencies recovered after Wednesday's sell-off on the stabilising oil price, with the Norwegian crown and Canadian dollar up by around 0.1 per cent.

 

Published on April 16, 2020

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