The US dollar maintained its bearish pattern on Thursday after the US government reported a new coronavirus pandemic-era low for the number of Americans filing for first-time unemployment benefits. The greenback has had a roller coaster ride throughout the public health crisis, hitting a multi-year pique of 103.00 before cratering 15% to its lowest level since early 2018. Has the greenback hit bottom, or is there still room for hemorrhaging?
According to the Department of Labor, initial jobless claims fell to 712,000 in the week ending November 28. This is down from the 787,000 in the previous week and is below the market forecast of 775,000.
Continuing jobless claims slumped to 5.52 million, coming in under the median estimate of 5.915 million. This is also down from 6.089 million in the previous week. The four-week average, which removes the week-to-week volatility, topped 739,000.
The US government also confirmed that 288,701 people applied for benefits through a temporary federal-relief benefits program that expires at the end of the year. Therefore, when you combine state and federal unemployment benefits, initial jobless claims have yet to slide below one million.
Experts think that the number may be a bit higher due to the Thanksgiving holiday. If people lose their positions, they are more likely to postpone submitting their claims until after the annual festivities.
This comes as the Government Accountability Office (GAO) published a new study that concluded continuing claims have been inflated due to inconsistent state reporting, fraud, and double counting.
The number of continued claims is not equivalent to the number of individuals claiming benefits.
Investors’ attention will be concentrated on the November jobs report on Friday. It is forecast that the US economy added 469,000 new jobs, which would be down from the 638,000 positions created in October. Economists are also anticipating an unemployment rate of 6.8%.
Trade data and factory orders will also be released to close out the trading week.
The US Dollar Index, which measures the greenback against a basket of currencies, plummeted 0.51% to 90.65, from an opening of 91.06, on Thursday. The index is poised for a weekly plunge of 1.5%, adding to its year-to-date decline of 6%. The buck is a traditional safe-haven asset that investors flee to in times of uncertainty. With growing confidence in the broader financial markets, traders have a greater risk appetite and put their money into riskier assets, such as equities and emerging market currencies.
The USD/CAD currency pair was flat at 1.2919 at 16:37 GMT on Thursday. The EUR/USD rose 0.25% to 1.2148, from an opening of 1.2118.
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