The US dollar has snapped its losing streak and is making gains against its G10 currency rivals on Thursday. The greenback is finding support on the US government reporting better-than-expected initial jobless claims and GDP data in the second quarter. The buck, which has been on a downward trend over the last three months, is looking to reverse its losses as traders seek refuge in a safe-haven asset.
According to the Department of Labor, the number of Americans filing for first-time unemployment benefits came in at 1.434 million in the week ending July 25. The market had penciled in a reading of 1.416 million. Continuing jobless claims topped 17 million, while the four-week average, which removes week-to-week volatility, was more than 1.368 million.
Last week, initial jobless claims totaled 1.416 million, continuing jobless claims were about 16.2 million, and the four-week average was more than 1.36 million.
The US economy suffered its biggest contraction in history in the second quarter, the Bureau of Economic Analysis (BEA) reported on Thursday. In the April-to-June period, the US gross domestic product (GDP) cratered 32.9%, better than the median estimate of -34.1%. A decline in imports and exports, state and local government spending, personal consumption expenditures (PCE), and private inventory investment were some of the contributing factors to the GDP collapse.
With two consecutive quarters of economic contraction, the US is officially in a recession.
In other data, the GDP price index slipped 2.1% in Q2, while PCE prices tumbled 1.9%. On Friday, personal income and spending and employment costs data will be published.
On Wednesday, the Federal Reserve completed its two-day Federal Open Market Committee (FOMC) policy meeting for July. The central bank left interest rates unchanged at 0.25% and continued its aggressive quantitative easing and stimulus and relief measures. It does not plan to move on rates anytime soon, and the Eccles Building pledged to maintain its efforts until authorities are satisfied the US has fully recovered from the COVID-19 public health crisis.
The US Dollar Index held steady on Thursday as the broader financial markets were in the red during pre-market trading. The index, which gauges the greenback against a basket of currencies, rose 0.13% to 93.57. The index has been slumping over the last month, dropping nearly 6%. Year-to-date, the index is down about 3%.
The USD/CAD currency pair surged 0.64% to 1.3420, from an opening of 1.3340, at 12:44 GMT on Thursday. The EUR/USD dropped 0.3% to 1.1757, from an opening of 1.1794.
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