The US labor market lost the biggest amount of jobs in history last month. But the US dollar was hardly fazed by the disastrous data, remaining one of the strongest currencies on the Forex market during Wednesday’s trading.
Automatic Data Processing released an employment report that showed an unprecedented drop of 20,236,000 from March to April on a seasonally adjusted basis. While the actual value was slightly better than the markets’ pessimistic expectations, it was still a terrible number. In fact, it was the worst drop in history, more than double the amount of jobs lost during the Great Depression. And it does not even reflect the whole impact of the coronavirus pandemic on the US labor market because the report shows data for only the private sector and just till April 12.
Today’s data made investors worried about what other employment reports will show this week. Experts predict that tomorrow’s initial jobless claims will show an increase of 3,000,000 for the last week, down from 3,839,000 the week before. Friday’s nonfarm payrolls are even more interesting for traders, and it is expected that the indicator will show a historic drop of 21,400,000.
Yet some market analysts argue that even if the reports will indeed be terrible, they may not affect the dollar that much. Indeed, today’s awful data had a very limited impact on the greenback. Specialists speculate that the extremely bad effect the pandemic had on the US economy has been already priced in, and now bad news just increases the demand for the US currency in its role of a safe haven.
EUR/USD dropped from 1.0840 to 1.0800 as of 15:31 GMT today, and its daily low was at 1.0782. USD/CHF rose from 0.9721 to 0.9748. Meanwhile, USD/JPY declined from 106.47 to 106.06 as the Japanese yen had even bigger demand in its role of a refuge than the greenback.
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