|

Jobless Claims Analysis: At 6.648 million, this corona-carnage is here to stay, dollar implications

  • US jobless claims are at 6.648 million in the week ending March 28.
  • Devastating data is set to continue beyond April and cause long-term damage.
  • The impact on the dollar depends on policymakers’ reactions.

Catastrophic data – no superlative is exaggerated for these horrendous weekly jobless claims figures. The number of claims doubled in comparison to the previous week, which already a historic record.

This comes on the background of reports claiming that various states are unable to process requests at a satisfactory pace. 

Jobless claims chart updated on April 2 2020

The US economy has been put into an induced coma – social distancing to fight the virus – but may have a hard time waking up. Returning to pre-crisis output and employment may take a significant period of time.

President Donald Trump has extended the stay-at-home guidelines until the end of April, with most states already imposing shelter in place orders. However, it will take time until some restrictions are lifted – and only gradually. According to New York Governor Andrew Cuomo, the death toll from COVID-19 will likely remain high until the summer.

People that are temporarily out of work may find that staying at home is not an ephemeral phenomenon. And when the economy wakes up, the businesses that have employed these people may be out of business.

While the Federal Reserve seems to have prevented a financial crisis, the economic crisis continues unfolding. For stock markets, the terrible jobless claims statistics are bad news.

What about the dollar?

The answer depends on politicians. Congress has passed a $2.2 trillion fiscal package – a huge undertaking that may be insufficient. With such figures, additional help will likely be needed to keep the masses of the unemployed content and able to hold on. Expenditure would also be warranted to support businesses from shutting shop and from employers to fire workers.

The scale is proving gargantuan.

If Washington works toward a new package, it will help stem the tide and weigh on the safe-haven dollar. While politicians often move slowly, the crisis has accelerated their responses. Democrats are already pushing for a fourth stimulus deal, and President Donald Trump is touting a massive infrastructure bill.

However, Senate Republicans are reluctant to move forward. Without immediate help from the federal government, the pain to the economy and stocks would worsen. And for the greenback, it means more gains.

See Market update: Assessing the damage done by Covid-19

Author

Yohay Elam

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

More from Yohay Elam
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD trims losses and returns to the 1.1750 area

The US Dollar resumed its decline in the American afternoon, helping EUR/USD trim early losses. The pair trades around 1.1750 as market participants gear up for the European Central Bank monetary policy decision and the United States Consumer Price Index.

GBP/USD flirts with 1.3400 after nearing 1.3300

The GBP/USD changed course after dipping with UK inflation data, and trades near the 1.3400 mark, as investors expect the Bank of England to deliver a 25 basis points interest rate cut after the two-day meeting on Thursday.

Gold maintains its positive momentum, trades around $4,330

The XAU/USD pair gained on a deteriorated market mood, trading near its weekly highs near $4,340. The bright metal advances with caution as market players await first-tier events in Europe and hte United States.

Bitcoin risks deeper correction as ETF outflows mount, derivative traders stay on the sidelines

Bitcoin (BTC) remains under pressure, trading below $87,000 on Wednesday, nearing a key support level. A decisive daily close below this zone could open the door to a deeper correction.

Monetary policy: Three central banks, three decisions, the same caution

While the Fed eased its monetary policy on 10 December for the third consecutive FOMC meeting, without making any guarantees about future action, the BoE, the ECB and the BoJ are holding their respective meetings this week. 

Crypto Today: Bitcoin, Ethereum, XRP slide further as risk-off sentiment deepens

Bitcoin faces extended pressure as institutional investors reduce their risk exposure. Ethereum’s upside capped at $3,000, weighed down by ETF outflows and bearish signals. XRP slides toward November’s support at $1.82 despite mild ETF inflows.