How Is US Dollar Hit by Employment Data?

The US dollar traded with a soft tone on Thursday, ending the day mixed across the major currencies. The EUR was among the weakest, while the AUD and the CAD were the strongest.

Disappointing US employment data was behind the broad dollar’s weakness at the beginning of the American session, as weekly unemployment claims unexpectedly jumped to 286000 in the week ended January 7, the highest reading since late in October. Like most major developed economies, US workers and businesses are struggling with Omicron-related disruptions.

The US Federal Reserve relies on what it calls ‘the jobs market at close to full employment’ to accelerate an aggressive reduction of its financial support to tame inflation. The unexpected increase in unemployment claims may be just a one-off, but if it keeps rising, the Fed may have to put a break. The central bank is having a monetary policy meeting next week and will unveil the outcome on Wednesday, January 26.

US Treasury yields remain stable through the day, with the yield on the 10-year Treasury note at 1.83%. Stocks, on the other hand, managed to advance, with all US indexes trading in the green heading into the close, although they retreated from intraday highs.

The EUR/USD pair trades around 1.1310, while GBP/USD hovers around 1.1620. The AUD/USD pair peaked at 0.7276, now trading around 0.7240, while USD/CAD stands at 1.2474. The USD/JPY pair is marginally lower at around 114.15.

Gold is ending the day pretty much unchanged, around $1,840 a troy ounce but managed to post a fresh two-month high of $ 1,847.92 a troy ounce. Meanwhile, crude oil prices surged to fresh multi-year highs, with WTI touching $87.08 a barrel but ending the day at around $85.20.