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The US dollar traded with a soft tone on Thursday, ending the day mixed across the board. The EUR was among the weakest, while the AUD and the CAD were the strongest.
Economic Data
Disappointing US employment-related figures were behind the broad dollar’s weakness at the beginning of the American session, as weekly unemployment claims unexpectedly jumped to 286K in the week ended 7 January, the highest reading since late in October.
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.
Other Developments
The GBP/USD pair has maintained choppy performance on Thursday with the US dollar seeing a mixed reaction to weaker than expected initial jobless claims and housing data, though the pair has for the most part remained well supported to the north of the 1.3600 level.
At current levels in the 1.3620s, cable looks on course to post an on-the-day gain of about 0.1% or roughly 20 pips. The sterling continues to shrug off Westminster noise surrounding the potential ousting of Boris Johnson from his position as UK Prime minister. His potential replacements, such as UK Chancellor Rishi Sunak (who is the front-runner to replace him), would be unlikely to mark a significant shift in economic policy.
The Euro remains undermined by the European Central Bank minutes of its December meeting, which underscored policymakers’ division on the inflation rates. Furthermore, dovish comments from ECB President Christine Lagarde and policymaker Pablo de Cos promise ill for the major.
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 crude oil touching $87.08 a barrel but ending the day at around $85.20.
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