Greenback steadies ahead of US jobs data

London

THE US dollar held firm on Thursday, but selling pressure may be in store later after data showed that jobless claims in the United States fell last week.

Economists have forecast weekly US jobless claims of 5.25 million, which would mean total claims over just three weeks of 15 million.

Analysts said a major global downturn had now been largely priced in by markets, with UBS forecasting an annualised contraction in second-quarter US gross domestic product range of 9.5 per cent, while Nomura estimated it will drop 42 per cent.

"The market is aware of the dramatic effects of the lockdown and is more interested in when these will end. So the US jobless figures are not a big game changer number," said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank.

The greenback edged down 0.1 per cent against major currencies before the US jobless figures. It had rallied nearly 9 per cent between March 9 and March 20 to more than a three-year high, before declining nearly 3 per cent to stand at 100.010.

European equity markets opened higher on Thursday on hopes lockdowns may be slowing the spread of Covid-19, although they lost some momentum in morning trading.

Currencies perceived as riskier bets - including the British pound and the Australian and New Zealand dollars - consolidated recent gains, with sterling up 0.5 per cent at US$1.2436.

The US dollar was flat against the Japanese yen.

The euro edged up 0.1 per cent versus the US dollar on expectations that talks between euro zone finance ministers late on Thursday would result in agreement on a half-a-trillion support package to fight the virus.

The single currency could face selling pressure on Friday if a deal fails to materialise, Mr Leuchtmann said.

"Most market participants think there'll be a solution tonight or at least very shortly afterwards," he said. "I think there's more potential for market reaction if they don't come to an agreement tonight."

Commodities-exposed currencies gained on expectations the world's largest oil producers would cut production at a meeting for the Organization of the Petroleum Exporting Countries and others (Opec+) late on Thursday. Energy ministers from the G-20 nations are also due to hold a video conference on Friday.

The Norwegian crown and South African rand added to the week's gains, edging up 0.2 per cent and 0.9 per cent respectively. REUTERS