US Dollar Gains As Jobless Claims Top 6 Million, Fed Unveils Main Street Stimulus

The US dollar is gaining against its key currency rivals at the end of the holiday-shortened trading week. The greenback is rising, despite the federal government reporting more than six million jobless claims that were more than what analysts had anticipated. The buck is also climbing on the Federal Reserve announcing a $2.3 trillion stimulus program to support Main Street lending.

According to the Department of Labor, initial jobless claims came in at 6.606 million for the week ending April 4, higher than the median estimate of 5.25 million. Last week, initial jobless claims topped 6.8 million.
Continuing jobless claims surged 7.455 million, up from the previous week’s 3.059 million. The market had expected eight million. The four-week average, which eliminates week-to-week volatility, surged 4.265 million, up from 2.666 million in the previous week.
In other data, the producer price index (PPI) slumped 0.2% in March, up from the 0.6% decline in February. The core PPI rose 0.2%, up from -0.3%.
On Thursday, the US central bank unveiled details of its $2.3 trillion Main Street business lending program. Under the program, the loans would be targeted to companies with a workforce of up to 10,000 employees and $2.5 billion in revenues. The loans would be at a minimum of $1 million and a maximum of $25 million – or â€œwhen added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed four times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization.”
The interest rate would equal the Fed’s Secure Overnight Financing Rate (0.01%), in addition to as many as 400 basis points with a four-year maturity. The Eccles Building and the Treasury Department would acquire 95% of the loan, and the banking lender would hold the other 5%.
Fed Chair Jerome Powell said in a statement:

Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus. The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.

The US Dollar Index, which measures the greenback against a basket of currencies, dipped 0.11% to 100.01. The index is poised for a slight weekly loss of 0.1%, but it is still up nearly 4% year-to-date.
The USD/CAD currency pair rose 0.1% to 1.4024, from an opening of 1.4013, at 12:55 GMT on Thursday. The EUR/USD advanced 0.35% to 1.0896, from an opening of 1.0860.

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