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US Dollar Struggles for Direction on Jobless Claims, -5% GDP in Q1

May 28, 2020 at 12:57 by Andrew Moran

One dollar note with an American eagleThe US dollar is struggling for direction on Thursday after a plethora of data provided a bearish portrait of the world’s largest economy. Initial jobless claims came in slightly worse than expected, while the gross domestic product (GDP) was revised downward for the first quarter. But financial markets were mostly positive in pre-market trading.

According to the Department of Labor, the number of Americans filing for unemployment benefits came in at 2.123 million for the week ending May 23. This is slightly worse than the median estimate of 2.1 million. Continuing jobless claims topped 21 million. The four-week average, which removes the week-to-week volatility, clocked in at 2.608 million. The biggest jumps in jobless claims were found in Kentucky, Pennsylvania, and Virginia. The largest declines were reported in California, Florida, New York, and Washington.

Last week, initial jobless claims hit 2.438 million, continuing jobless claims were just short of 25.1 million, and the four-week average reached 3.042 million.

The Bureau of Economic Analysis (BEA) revised its GDP growth rate for the January-to-March period downward from -4.8% to -5%. Its second estimate noted that there was a decline in private inventory investment, which was offset by a slight increase to personal consumption expenditures (PCE) and non-residential fixed investment.

Census Bureau numbers highlighted that new orders for US manufactured durable goods plummeted 17.2% in April, down from the 16.6% slide in March. This is the steepest decline since August 2014, but the market did forecast a drop of 19%. Demand for transportation equipment slumped 47.3%, while core capital goods orders fell 5.8%.

On Wednesday, the Mortgage Bankers Association (MBA) reported that mortgage applications for the week ending May 22 jumped 2.7%, up from -2.6% in the previous week.

The benchmark 10-year Treasury note edged up 0.021 basis points to 0.698%, while the 30-year bond climbed 0.046 basis points to 1.479%.

The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.17% to 98.90, from an opening of 99.06. The index is on track for a weekly loss of 0.5%, paring its year-to-date gain to about 2.6%.

The USD/CAD currency pair rose 0.15% to 1.3771, from an opening of 1.3754, at 12:50 GMT on Thursday. The EUR/USD advanced 0.1% to 1.1020, from an opening of 1.1010.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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