Significant drop for dollar as US unemployment claims released

Chris Lee

The US dollar suffered in the foreign exchange markets on Thursday after much-anticipated joblessness claims for the US were released.

Over 3m Americans are understood to have claimed unemployment benefits last week alone the figures showed.

As a result of the developments, the greenback hit its worst position in a week in the dollar index – which is a tool designed to monitor the currency’s performance in direct comparison to a range of others from across the globe.

It was down to 99.92 at one point, which reflected its worst performance since the middle of the month.

Elsewhere around the world, other currencies stepped in to mop up as the dollar declined dramatically in value.

The single European currency was up by over 0.8% compared to the previous day in its pair against the US dollar, reaching $1.0972 at one stage.

This was its best performance again since the middle of March.

The Australian dollar, which over recent months has faced an unprecedented onslaught due to its connection to China and the trade war and coronavirus crises in that country, was up by 1.31% – a welcome rise for traders of the Australian currency.

This meant that the currency was noted at $0.6036 in its pair against the US dollar at one point, which represented a significant rise.

The dip in the dollar’s value came despite the fact that the upper house of the US Congress, the Senate, made moves earlier in the week to unanimously approve a stimulus package.

Overall, the package is believed to be worth around $2tn.

The aim of the package is to provide assistance to workers who have been laid off as a result of coronavirus, and also to make sure that businesses are supported.

There is also some provision within the package to ensure that medical supplies can be bought too.

This comes after the US central bank, the Federal Reserve, also made an economic intervention by purchasing a range of bonds and instituting a number of new loan programmes.

According to analysts, there is no escape from the position of constant turmoil that currencies are seeing at the moment.

While in recent days the dollar has been the currency of choice as traders have made moves to liquidate their investments in order to get cash in dollars, there is no suggestion that volatility in the markets is likely to lift any time soon.

In terms of events on the economic calendar, there are a couple of key moments scheduled in over the coming 24 hours or so.

In the US, Friday afternoon will see the release of a personal income metric for February.

It is expected that this metric will show a change from 0.6% to 0.4% on a month on month basis when it is released at 12:30pm GMT.

In the same time slot, there will be a core personal consumption expenditure release from the US.

This will cover February too, and is expected to show a change from 1.6% to 1.7% on a year on year basis.

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Chris Lee
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