Dollar steadies before U.S. jobs data, riskier FX up on OPEC hopes - REUTERS

APRIL 09, 2020

by  Iain Withers

LONDON (Reuters) - The dollar held firm on Thursday after the swings caused by the coronavirus pandemic, but some selling pressure may be in store with U.S. jobless data due later expected to show claims near record highs.

Economists are forecasting weekly jobless claims of 5.25 million, which would mean claims over just three weeks totalled a staggering 15 million. But despite the dire forecasts, analysts said a huge global downturn was now largely priced in by markets.

Forecasts for second-quarter U.S. gross domestic product range from UBS’s 9.5% annualised contraction to Nomura’s 42%.

The dollar was flat against major currencies before the U.S. jobless figures due at 1230 GMT. It had rallied nearly 9% between March 9-20 to more than a three-year high before declining nearly 3% to stand at 100.05.

European equity markets opened higher on Thursday on hopes lockdowns may be slowing the spread of the novel coronavirus.

Most major currency pairs barely budged on Thursday, allowing currencies perceived as riskier bets, including the British pound and the Australian and New Zealand dollars, to consolidate recent gains.

The dollar was also flat against the euro and Japanese yen.

“Markets already know that the U.S. economy is being hit by extraordinary shocks,” said Tohru Sasaki, head of Japan market research at JPMorgan.

“Even if the (jobless) number increases, it will probably surprise few people, while a better reading could enhance the perception that the worst may be over and trigger a bigger market reaction.”

Commodities-exposed currencies were among the few to gain on expectations the world’s largest oil producers would cut production at an OPEC+ meeting later on Thursday. Energy ministers from the G20 nations are also due to hold a video conference tomorrow.

The Norwegian crown and South African rand - which were both battered in a market sell-off in March - added to the week’s gains, edging up 0.3% and 0.7% respectively.

Analysts at Deutsche Bank said in a note that an agreement to cut production at the OPEC+ meeting could support oil currencies.

But they cautioned: “Unless or until the global economy ramps up again, even a best case scenario for the OPEC+ and G20 meetings will provide only limited relief.”

Reporting by Iain Withers; additional reporting by Hideyuki Sano in Tokyo; editing by Larry King


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