Greenback at 1-week high before US jobless data

London

THE US dollar consolidated its gains against other currencies on Thursday before the release of weekly US jobless data, which was expected to provide more evidence of the world's biggest economy hurtling into a deep recession.

The greenback rose 0.2 per cent to 99.808 to a one-week high against a basket of major currencies, after snapping a four-day losing streak the previous day as equity market gains fizzled.

While stabilising oil prices and some improvement in risk sentiment on stock markets helped temper the greenback's gains, economists were counting the extent of the damage to the world economy from weeks of enforced lockdowns.

Economists had forecast US weekly jobless claims of 5.1 million, which would lift total filings during the crisis above 20 million.

Dire US retail and factory data and a nosedive in oil prices to 18-year lows on Wednesday strengthened the US dollar across the board.

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The greenback has gained broadly during the crisis as investors scrambled for the safety of the world's reserve currency, although it is down from its late-March highs since the US Federal Reserve unleashed a stream of measures to support the economy.

"In the short term, the dollar is expected to remain firm because of its safe-haven status and as the global economic situation remains uncertain," said Andrew Wilson, chairman of global fixed income, Goldman Sachs Asset Management.

"We expect the dollar to underperform in the medium term as economies start to recover," he added.

US President Donald Trump was due to announce guidelines on re-opening the country's economy at a press conference on Thursday.

The euro resumed its drop versus the US dollar, down a third of a per cent at US$1.08775 as a half-trillion-euro compromise deal struck between euro zone governments last week to support countries through the novel coronavirus outbreak is widely seen as insufficient, especially for debt-laden Italy.

"The market has finally come to the conclusion that what the euro group delivered was not enough," said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

"This shows that the European Central Bank is still in a permanent role to prevent a euro zone crisis, which is not a good situation to be in," he added. REUTERS