US Dollar Looks for Direction As Jobless Claims Fall to Pandemic Low

The US dollar is looking for direction against many of its currency rivals on Thursday after the federal government reported that the number of Americans filing for first-time unemployment benefits declined to a pandemic low. The US central bank’s important September policy meeting continues to weigh on the buck, while uncertainty surrounding Congress’ newest stimulus package sparks concern in the broader financial markets.

According to the Department of Labor, initial jobless claims came in at 860,000 in the week ending September 12, slightly worse than the market forecast of 850,000. But this is still the lowest reading since the coronavirus pandemic started.
Continuing jobless claims fell to 12.628 million, while the four-week average, which removes the week-to-week volatility, hit 912,000.
Last week, the number of Americans filing for first-time unemployment benefits reached 893,000. Continuing jobless claims reached 13.544 million, and the four-week average was 973,000.
It should also be noted that Americans receiving benefits from the Pandemic Unemployment Assistance Program, which is open to those who are ineligible for other government benefits, declined to 658,737.
Some economists are concerned that jobless claims could increase in the coming weeks for two reasons: the Paycheck Protection Program (PPP) expired, and the additional $600 a week in unemployment benefits that could discourage people from looking for work. Market observers are additionally concerned about a COVID-19 resurgence in the US that could reverse many of the gains seen during a strong summer.
In other economic data, housing starts fell 5.1% in August, raising the total to 1.416 million. This is down from the 17.9% surge in July. Building permits also slumped 0.9% in August to 1.47 million, which is also down from the 17.9% increase in the previous month.
The Philadelphia Federal Reserve Bank’s Manufacturing Index slipped from 17.2 in August to 15.0 in September.
On Wednesday, the US central bank finished its two-day Federal Open Market Committee (FOMC) meeting for September. The Fed left interest rates unchanged at near zero, and it confirmed that low rates are here to stay until at least 2023. The Eccles Building also called on Congress to support the economic recovery with more fiscal stimulus. It modified its economic projections, noting that the gross domestic product and the unemployment rate will be better this year than initially anticipated.
The US Dollar Index, which gauges the greenback against a basket of currencies, struggles for direction on Thursday as it has seesawed throughout the early trading session. The index rose 0.06% to 93.27, from an opening of 93.15.
The USD/CAD currency pair advanced 0.29% to 1.3218, from an opening of 1.3179, at 13:28 GMT on Thursday. The EUR/USD dropped 0.14% to 1.1800, from an opening of 1.1818.
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