Dollar dips as investors brace for surge in jobless claims

imageForex1 hour ago (Mar 25, 2020 08:35PM ET)

(C) Reuters. FILE PHOTO: Photo illustration of one hundred dollar notes in Seoul

By Stanley White

TOKYO (Reuters) – The dollar fell against the yen on Thursday before data expected to show a surge in U.S. claims for unemployment benefits as companies lay off workers due to the rapid spread of the coronavirus.

The pound extended declines against the euro and the dollar due to lingering worries that Britain is not adequately prepared to deal with an increase in coronavirus cases after the flu-like illness ravaged health care systems in Italy and Spain.

The Australian and New Zealand dollars, both of which are closely liked to the global commodity trade, fell against their U.S. counterpart as traders avoided taking on excessive risk.

Investors anxiously await the passage of a $2 trillion U.S. stimulus package to offset the economic impact of the coronavirus pandemic, but there are already indications that some U.S. states will need more money for medical supplies as the health care system struggles to cope.

“It could be difficult for the markets to digest weekly jobless claims,” said Tohru Sasaki, head of Japan markets research at JP Morgan Securities in Tokyo.

“Bad numbers are expected and priced in to a certain extent, but there are people who think things will get even worse. In the end this may support the dollar as investors choose to bring their money home.”

The dollar fell 0.2% to 110.98 yen in Asia on Thursday.

Against the Swiss franc , the dollar was little changed at 0.9652.

Sterling fell 0.43% to $1.1831 and fell 0.5% to 92.08 pence per euro (EURGBP=D3).

The pound’s losses accelerated early in Asian trade after the British government said the total number of coronavirus cases in the UK rose to 9,529 on Wednesday from 8,077 the previous day.

U.S. weekly jobless claims due later on Thursday are expected to rise to around a million, which would be well above the previous peak seen during the global financial crisis.

Some analysts say jobless claims could even exceed one million as companies are expected to rapidly shed workers.

Draconian restrictions on personal movement aimed at slowing the spread of the coronavirus are widely expected to cause a global recession.

Republicans and Democrats in the U.S. Senate hoped to vote on Wednesday on a $2 trillion emergency package but found themselves fending off critics from the right and left who threatened to hold up the bill.

U.S. President Donald Trump is expected to swiftly sign the bill into law, but a Senate vote has yet to be scheduled.

The euro (EUR=EBS) held steady at $1.0846 in Asia on Thursday. The common currency held on to gains against the Swiss franc (EURCHF=EBBS), trading at 1.0632.

The German lower house on Wednesday suspended the country’s debt brake and approved a debt-financed supplementary budget of 156 billion euros to pay for healthcare and keep companies afloat.

The Australian dollar fell 1% to $0.5905, while the New Zealand dollar declined by 0.79% to $0.5805.

Both the Aussie and the kiwi collapsed to multi-year lows earlier this month as nervous investors liquidated positions in favor of holding their money in the greenback in cash deposits.

Dollar dips as investors brace for surge in jobless claims

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published. Required fields are marked *