US Dollar Strengthens on Initial Jobless Claims, Fed Minutes

The US dollar is strengthening against a few currencies at the end of the trading week, buoyed by another decline in initial jobless claims and a central bank that is unlikely to do anything on interest rates. But disappointing housing numbers put a cap on the buck’s ascent.

According to the Bureau of Labor Statistics (BLS), the number of Americans filing for unemployment benefits tumbled by 1,000 to 211,000 in May. This is down from the previous week’s 212,000 and it beats the market forecast of 219,000.
US manufacturing continues to falter as growth slumped to a decade low this month, driven primarily by fears over the US-China trade war. The May IHS Markit US Manufacturing Purchasing Managers’ Index (PMI) fell to 50.6, down from 52.6 in April. It was also a full point lower than the median estimates.
Real estate is another sector that might be cooling down, even in the middle of the busiest buying season of the year. New home sales in April slipped 6.9% after expanding by a stellar 8.1% in March.
Investors might now be relieved that there will unlikely be a case of “will they or won’t they?” when it comes to interest rates. According to minutes from the Federal Open Market Committee (FOMC)’s May 1–2 meeting, members agreed that a â€œpatient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time.”
In other words, the Federal Reserve is unlikely to pull the trigger on a rate hike or a rate cut anytime soon, providing some certainty in the equity market. That said, Fed officials are comfortable where the target range – 2.25% to 2.50% — is for the time being.
But it should be pointed out that the policymaking meeting took place just before US-China trade talks fell through.
The US Dollar Index dipped 0.07% to 97.78, recording a weekly loss of 0.2%. Year-to-date, the index has risen 1.7%.
The USD/CAD currency pair slid 0.16% to 1.3451, from an opening of 1.3474, at 11:29 GMT on Friday. The USD/GBP plunged 0.23% to 0.7883, from an opening of 0.7901.

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