The US dollar is looking to extend its gains against several major currency rivals on Thursday after a plethora of data pointed to a strengthening economy for the world’s second-largest market. The greenback, which has come under pressure this month, is benefiting from both safe-haven demand and positive macroeconomic economic developments, including first-time jobless claims and the gross domestic product.
According to the Bureau of Economic Analysis (BEA), the US economy expanded at an annualized rate of 33.1% in the third quarter, beating market expectations of 31%. This is the largest year-over-year expansion on record, driven mostly from personal spending, which was buoyed by weekly unemployment benefiits.
The US witnessed greater growth in private inventory investment, exports, nonresidential fixed investment, and residential fixed investment. But the country saw a decline in federal, state, and local government spending.
Despite the positive numbers, the July-to-September period is still 3.5% below the pre-pandemic level. The fourth-quarter outlook continues to be uncertain due to the resurgence in COVID-19 cases.
The Department of Labor reported that initial jobless claims clocked in at 751,000 in the week ending October 24, beating the median estimate of 775,000. This is the lowest figure in the era of the coronavirus case. Last week, the number of first-time unemployment benefits was 791,000.
Continuing jobless claims topped 7.756 million, while the four-week moving average, which eliminates week-to-week volatility, was just below 788,000.
Meanwhile, the GDP Price Index rose 3.7% in the previous quarter, up from the 2.1% slump in the second quarter. PCE Prices surged 3.7% quarter-over-quater, up from the 1.6% slide. Core PCE Prices increased 3.5%, up from the 0.8% drop in Q2.
The financial markets erased much of their early morning losses due to better-than-expected GDP and jobless claims. But the resurgence in coronavirus cases continues to linger in the background, overshadowing many of the bullish trends.
The US reported more than 81,000 new infections on Wednesday. It is unclear, heading into the 2020 general election, if states are going to implement another round of coronavirus-relased restrictions. Many European countries, which are going through a second wave, are beginning to impose lockdowns. Canada has started its second wave, but the country has refrained from going into lockdown mode.
The US Dollar Index, which measures the greenback against a basket of currencies, surged 0.34% to 93.73, from an opening of 93.46. The index is on track for a weekly gain of 0.84%, lowering its year-to-date loss to below 3%.
The USD/CAD currency pair rose 0.37% to 1.3372, from an opening of 1.3322, at 13:29 GMT on Thursday. The EUR/CAD tumbled 0.33% to 1.1708, from an opening of 1.1748.
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