Dollar pares gains on continued U.S. stimulus hope

Market Review - 07/08/2020 01:07GMT  

Dollar pares gains on continued U.S. stimulus hope

The greenback went through a roller-coaster session on Thursday. Although dollar pared initial losses made in Asia and European morning on usd's broad-based recovery ahead of U.S. key jobs data on Friday, the greenback retreated again in New York afternoon as the Democrats and Trump administration are making progress on next coronavirus stimulus aid.  
  
Reuters reported U.S. House Speaker Nancy Pelosi said on Thursday that negotiations with the Trump administration over the next phase of coronavirus aid are making some progress and proceeding in a positive way, but they remain far apart on key issues such as extending supplemental unemployment benefits.   Also, the initial claims for state unemployment benefits totaled a seasonally adjusted 1.186 million for the week ended Aug. 1, compared to 1.435 million in the prior week, the Labor Department said on Thursday. Economists polled by Reuters had forecast 1.415 million applications in the latest week.   
  
Versus the Japanese yen, although dollar retreated from 105.61 in Australia to 105.40 shortly after European open on weakness in U.S. Treasury yields, price rebounded to 105.69 but only to drop to session lows of 105.31 in New York morning on cross-buying in jpy. However, the pair then recovered to 105.64 and then swung sideways.  
  
Although the single currency moved sideways in Asia and briefly jumped to a 26-month high of 1.1915 at European open, renewed selling interest emerged and later knocked price down to session lows of 1.1819 in New York morning on usd's recovery before rebounding to 1.1893 on short-covering and traded at 1.1865 near the close.  
  
The British pound rebounded to 1.3143 at Asian open and then rallied to 1.3184 (Reuters) at European open after the Bank of England kept its interest rates unchanged and indicated that the central bank does not have a plan to cut rates below the 0% mark before retreating to 1.3142 on profit-taking. However, the pair then ratcheted higher to a near 5-month high at 1.3185 before weakening to 1.3120 in New York on usd's recovery. Later, price rebounded to 1.3171 and then moved sideways.  
  
Reuters reported the Bank of England said on Thursday it was keeping its benchmark interest rate at 0.1%. The BoE also left unchanged the size of its bond-buying programme at 745 billion pounds ($978 billion). A Reuters poll of economists had pointed no change in either of the BoE's two main stimulus tools.   
And the Britain's central bank said it saw no immediate case to cut interest rates below zero on Thursday as it warned the economy would take longer to recovery from its COVID slump than it previously forecast.  
  
Data to be released on Friday :  
  
Australia AIG services index, Japan all household spending, coincident index, leading indicator index, China exports, imports, trade balance, Germany industrial output, exports, imports, trade balance, current account, France current account, industrial output, non-farm payrolls, trade balance, imports, exports, UK Halifax house prices, Italy trade balance, U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, wholesale inventory, wholesale sales, and Canada employment change, unemployment rate, Ivey PMI.