Market Review - 26/03/2020 23:56GMT
Dollar ends broadly lower as U.S. jobless claims surge to record
The greenback ended lower across the board on Thursday as U.S. initial jobless claims surged past 1982 record and hit historic high of more than 3 million last week as businesses across the United States are closed in order to stop the spreading of coronavirus.
Reuters reported the number of Americans filing claims for unemployment benefits shot to record of more than 3 million last week as strict measures to contain the coronavirus pandemic ground the country to a sudden halt, unleashing a wave of layoffs that likely brought an end to the longest employment boom in U.S. history. Initial claims for unemployment benefits rose to 3.28 million in the latest week from a revised 282,000 the previous week, eclipsing the previous record of 695,000 set in 1982, the U.S. Labor Department said on Thursday. Economists polled by Reuters had forecast claims would rise to 1 million, but estimates had ranged to as high as 4 million.
Versus the Japanese yen, dollar met renewed selling at 111.30 in Australia and fell to 110.47 in Asian morning on falling U.S. Treasury yields and selloff in the Nikkei 225 before recovering to 110.85 but later dropped to session lows of 109.22 in New York afternoon on usd's broad-based weakness. The pair then staged a short-covering rebound to 109.62 near New York closing.
The single currency found renewed buying at 1.0871 in Australia and jumped to 1.0933 at Asian open on usd's broad-based weakness before retreating to 1.0893. However, the pair rallied from 1.0898 at European open and later hit +a 1-week high at 1.1058 in New York on usd's broad-based weakness as U.S. initial jobless claims surged.
Although the British pound initially retread to 1.1778 in Australia on cross-selling in sterling, price rebounded to 1.1885 at Asian open before moving sideways. Cable then rallied from 1.1820 at European open to 1.1960 before weakening to 1.1868. However, the pair later rose to a 1-week high at 1.2230 in New York afternoon on usd's broad-based weakness and as the Bank of England promised further action could take place if needed to limit economic damage caused by the coronavirus pandemic after leaving interest rates unchanged at 0.1% and then moved sideways.
Reuters reported the Bank of England kept its key interest rate at a record-low level of 0.1% on Thursday and said it was ready to expand its asset purchases further if needed to support the economy or guard against an unwarranted tightening of financial conditions. The BoE said it was maintaining the total size of its bond-buying programme - comprising mostly British government debt and some corporate bonds - at 645 billion pounds ($774 billion). The central bank made two emergency cuts to its key interest rate earlier this month and boosted its bond-buying programme in a bid to offset some of the hit to the economy from the spread of the coronavirus and the government's response to it. Also, Britain pledged on Thursday to contribute 210 million pounds ($253 million) to the international coalition to find a vaccine against coronavirus following a virtual summit of G20 leaders. "My call to every G20 country and to governments around the world is to step up and help us defeat this virus," Prime Minister Boris Johnson said in a statement.
In other news, Reuters reported the U.S. "may well be in recession" but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen, Federal Reserve chair Jerome Powell said Thursday in an interview on NBC's Today Show. "We are not experts in pandemic... We would tend to listen to the experts. Dr. Fauci said something like the virus is going to set the timetable, and that sounds right to me," Powell said, in reference to Anthony Fauci, head of National Institute of Allergy and Infectious Diseases. "The first order of business will be to get the spread of the virus under control and then resume economic activity."
Data to be released on Friday :
Japan Tokyo core CPI, Tokyo CPI, UK nationwide house price index, France consumer confidence, Italy manufacturing business confidence, consumer confidence, U.S. personal income, personal spending, core PCE price index, PCE price index, University of Michigan sentiment, and Canada average weekly earnings, budget balance.
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