Dollar Down after Disappointing U.S. Employment Data 

  • 18
    September, 2020

    On Friday morning, the dollar was down in the Asia Session, with disappointing U.S. employment data dampening both the economic outlook and investor sentiment. 

    The U.S. Dollar Index inched down 0.05% to 92.927 by 12:48 AM ET (5:48 AM GMT) 

    On Thursday, the employment data that was released showed that initial jobless claims fell slower than expected. 860,00 claims were filed over the past week against the predicted 850,000. 

    On Wednesday, The Federal Reserve’s policy decision is still being digested by the investors which pledged low interest rates for years to come while also upgrading its 2020 GDP forecast. 

    The USD/JPY pair inched up 0.07% to 104.80. The Bank of Japan (BOJ) keeping its monetary policy steady, as widely expected, as it handed down its policy decision on Thursday. 

    “The dollar/yen dropped overnight almost too much, although it’s been falling since Monday,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters. 

    On Thursday, another rout in stocks also contributed to a weak dollar. “For the dollar to regain its upward trend, it’s necessary for the market to make sure that the U.S. stocks take a pause from a correction in stock prices,” Yamamoto added. 

    The AUD/USD pair inched 0.08% to 0.7318 and the NZD/USD gained 0.41% to 0.6782. 

    The USD/CNY pair edged down 0.11% to 6.7556. Although the yuan has risen more than 6% from late May’s lows against the greenback as the Chinese economy continues its recovery from COVID-19, some investors are raising concerns over the rapid rise. 

     TECHNICAL OUTLOOK 

     

    On the daily charts of GBP/USD, the price opened at 1.2974. The dollar is edging down against the GBP despite Brexit concerns and the negative data from the Fed also boosted the outlook of the sterling’s performance. 

    The Bank of England (BOE) announced its own policy decision on Thursday, dangling the possibility of negative interest rates to counter rising number of COVID-19 cases, higher unemployment and the possibility of a hard Brexit. 

    However, European Commission President Ursula Von Der Leyen indicating that she was “convinced a trade deal with Britain was still possible” gave the pound a boost. 

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