US Dollar Index Regain Momentum as Jobless Claims Fall
After hitting 2020 low of 92.50 on Thursday, the US dollar index recovered on Friday as the drop in jobless claims helped in soothing investor’s sentiments.
The index is hovering above 93 levels following a few consecutive days of the selloff. The increasing prospects for the second stimulus package have also been adding to investor’s sentiments.
The US initial jobless claims plunged to 1186K last week, compared to the analyst’s expectations for the drop to a level of 1415.0K.
The dollar has lost investor’s sentiments as several analysts warned that the US dollar is losing its reserve currency status due to mounting fiscal deficit.
In addition, some countries like Russia and China have started trade in their own currencies instead of the US dollar.
“In the first quarter of 2020, the dollar’s share of trade between Russia and China fell below 50% for the first time on record. The greenback was used for only 46% of settlements between the two countries. The euro made up an all-time high of 30%, while their national currencies accounted for 24%, also a new high,” Goldman Sachs said.
On the other hand, Euro has been sustaining the gains on the back of improving economic and industrial data. The factory orders in Germany swelled by 27% month over month, up sharply from analysts forecast for the growth of 10%.
Meanwhile, British Pound has hit five months high against the US dollar on Thursday as Banks of England has left interest rates unchanged.
However, the GBPUSD pair lost previous gains in Friday trade on the dovish economic outlook from BOE. The central bank expects the UK economy to reach the pre-coronavirus level in 2021.
The Australian dollar retreated slightly from 18-month highs on Friday against the US dollar. Despite that, the Australian dollar is set to make a seventh straight weekly gain.