US Dollar Finds Safe-Haven Support on Worse-Than-Expected Jobless Claims

The US dollar is finding support from investors who are seeking shelter following a worse-than-expected jobless claims report. The greenback has been climbing in recent weeks amid a return of volatility in the broader financial markets. With growing uncertainty in the economy surrounding the coronavirus and the upcoming cold and flu season, the buck might pare much of its losses by year’s end.

According to the Department of Labor, the number of Americans filing for first-time unemployment benefits rose 870,000 in the week ending September 19. The market had penciled in an increase of 840,000. Continuing jobless claims hit 12.58 million, while the four-week average, which eliminates week-to-week volatility, topped 878,000.

States reported 630,000 new claims for the Pandemic Unemployment Assistance (PUA), raising the total to 11.5 million in the week ending September, down by about three million from the previous week.

The Labor Department added that workers applying for benefits under the PUA program, state programs, and other efforts totaled 26 million. This is down from the previous week’s 29.8 million. But some experts note that the number could be inflated due to delays of the distribution of benefits in certain states, like California, where there has been a backlog of claims.

Last week, initial jobless claims fell to a pandemic low of 866,000. Continuing jobless claims reached 12.747 million, while the four-week average touched 913,500.

Despite the overall numbers being encouraging for the labor market, the leading stock indexes were down in early morning trading. The benchmarks have been bleeding red ink this week as the broader market selloff has been prevalent throughout September. Even the metal commodities have been plunging over the last ten trading sessions. But this has been beneficial for the greenback since volatility and economic woes help the buck.

It did not help that Federal Reserve Vice Chair Richard Clarida stated that the world’s largest economy was stuck in a “deep hole” of joblessness and weak demand, urging Congress to pass additional fiscal stimulus measures. He added that the central bank would not consider raising interest rates until inflation hits the 2% target rate.

The US Dollar Index, which measures the greenback against a basket of currencies, advanced 0.1% to 94.49, from an opening of 94.38. The index is on track for a weekly surge of about 1.6%, paring its year-to-date loss to below 2%. So far this month, the DXY is up 1.6%.

The USD/CAD currency pair rose 0.13% to 1.3404, from an opening of 1.3388, at 13:29 GMT on Thursday. The EUR/USD dropped 0.11% to 1.1649, from an opening of 1.1660.

© AndrewMoran for Forex News, 2020. |
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Post tags: Commodities, Coronavirus, Dollar, EUR/USD, Federal Reserve, Interest Rates, Jobless Claims, United States, US Dollar Index, USD/CAD

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