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US Dollar Weakens As Initial Jobless Claims Fall to Four-Month Low

July 9, 2020 at 13:06 by Andrew Moran

Benjamin Franklin looks from a 100 dollar notesThe US dollar is trading slightly lower against a myriad of G10 currency rivals on Thursday after the US government reported that the number of Americans filing for first-time unemployment benefits beat market forecasts. The greenback has been struggling in recent sessions as investors become more confident in the broader financial market and pour into riskier bets, despite the resurgence of confirmed coronavirus cases in the background.

According to the Department of Labor, initial jobless claims came in at 1.314 million in the week ending July 4, better than the median estimate of 1.375 million. This is the lowest level in four months. Continuing jobless claims fell to 18.062 million, while the four-week average, which eliminates week-to-week volatility, also slipped to a little more than 1.437 million.

Last week, initial jobless claims topped 1.4 million. This statistic has been on a downward trend since peaking at the end of March, suggesting that the worst is over unless states choose to reimpose lockdown measures again. But while the overall US economy has created 7.5 million new jobs in just two months, employment totals remain 15 million below pre-pandemic levels.

On Wednesday, mortgage applications rose 2.2% in the week ending July 3, reports the Mortgage Bankers Association (MBA). The 30-year mortgage rate also dipped from three basis points to 3.26%.

US financial markets barely reacted to the news in pre-market trading as the leading stock indexes were relatively flat. The bond market responded to the data as the Treasurys ticked lower. The benchmark 10-year note yield dipped 0.5 basis points to 0.654%, the 30-year fell 0.5 basis points to 1.387%, and the two-year note edged up 0.4 basis points to 0.159%.

The last auction of the week will be happening on Thursday as investors prepare to scoop up $19 billion of debt. Despite the huge influx of bonds flooding the market, investors’ appetites remain strong.

The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.06% to 96.37, from an opening of 96.45. The index is poised for a weekly loss of about 1%, wiping out its year-to-date gain.

The USD/CAD currency pair dropped 0.08% to 1.3503, from an opening of 1.3515, at 12:57 GMT on Thursday. The EUR/CAD was flat at 1.5315.

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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