The US dollar weakened on greater confidence in the broader financial markets as the government reported Initial Jobless Claims falling to their lowest levels in three months. A renewed rally in the equities arena, surging Treasurys, and positive economic data weighed on the conventional safe-haven asset. With the latest drop, the greenback has officially turned negative for the year.
According to the Bureau of Labor Statistics (BLS), the number of Americans filing for unemployment benefits fell to 730,000, below the median estimate of 838,000. This is down from last week’s reading of 841,000.
Continuing Jobless Claims tumbled to 4.419 million, while the four-week average, which removes week-to-week volatility, slipped to 807,750.
An additional 451,402 applications for jobless benefits were submitted through a temporary federal-relief program. When new federal and state claims are added up, the government received another 1.16 million applications. Since the peak of the COVID-19 pandemic in May, the combined claims have yet to slide below one million.
The largest declines were seen in California and Ohio. At the same time, experts note that last week’s blast of wintry weather that led to massive power outages in multiple states, including Texas, might have skewed the labor data.
Next week, the February jobs report will be released, and economists are anticipating 110,000 new positions and an unemployment rate of 6.4%.
In other economic data, the gross domestic product (GDP) growth rate was nudged up to 4.1% in the fourth quarter, up from the previous estimate of 4%. The GDP price index for the October-to-December period advanced 1.8%.
The Bureau of Economic Analysis (BEA) reported that Durable Goods Orders jumped 3.4% in January, beating the market forecast of 1.1%. This represented the ninth consecutive monthly gain in new orders for US manufactured durable goods and was the best reading since July.
On Friday, personal income, industrial prices, and consumer sentiment data will be published.
This week, Federal Reserve Chair Jerome Powell‘s semi-annual testimony to Congress dominated business headlines. He reassured everyone that the central bank would maintain its monetary policy stance and dismissed widespread inflation fears. The comments allowed the financial markets to renew their rally following two days of steep losses.
Our policy is accommodative because unemployment is high and the labor market is far from maximum employment.
That doesn’t necessarily lead to inflation because inflation is a process that repeats itself year over year over year.
We live in a time where there is significant disinflationary pressures around the world and where essentially all major advanced economy’s central banks have struggled to get to 2%. We believe we can do it, we believe we will do it.
The US bond market was mostly in the green toward the end of the trading week, with the ten-year bond yield rising 0.062% to 1.453%. The one-year bill edged up 0.005% to 0.081%, while the 30-year bond added another 0.051% to 2.293%.
The US Dollar Index (DXY), which measures the greenback against a basket of currencies, fell below 90.00 on Thursday. The DXY plunged 0.39% to 89.82, from an opening of 90.07. The index is on track for a weekly loss of nearly 1%, bringing its year-to-date performance into negative territory.
The USD/CAD currency pair dropped 0.14% to 1.2496, from an opening of 1.2513, at 13:07 GMT on Thursday. The EUR/USD picked up 0.32% to 1.2210, from an opening of 1.2168.
© AndrewMoran for Forex News, 2021. |
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Post tags: Bonds, Consumer Sentiment, Dollar, Durable Goods Orders, DXY, EUR/USD, Federal Reserve, GDP, Jerome Powell, Jobless Claims, Personal Income, United States, US Dollar Index, USD/CAD
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