US dollar still pressured despite jobless claims figures, less hawkish Fed

The US Dollar Index, or DXY, was trading slightly higher at 105.80 earlier on Thursday. Despite cautious words made by Fed Chair Jerome Powell regarding inflation and its unclear future trajectory, the dollar saw a brief upward momentum. Weekly Jobless Claims data appear to be helping the dollar, which is currently trading at 105.524, down -0.10%, ahead of Friday’s Nonfarm Payrolls.

Fed Chair Powell indicated that despite considerable easing, inflation is still high, pointing to an unclear future. Powell agrees that stringent monetary policy has levelled dual objective risks by balancing inflation and an overheating economy. Initial Jobless Claims by Week were consistent.

The Fed claims that although the US economy has made significant progress, inflation is still alarmingly high and its future is unclear. While overheating and inflation have been restrained by the Fed’s restrictive actions, inflation momentum has stalled. The nonfarm payrolls data on Friday will give traders further information about the health of the economy.

While there were no changes reported in Continuing Claims, which remained at 1.774 million, same from the previous week, Weekly Initial Jobless Claims came in at 208K.

Expectations for a Fed rate drop have slightly changed, with July odds rising to 33% and September and November odds rising to 70% and 95%, respectively. Weak yields are seen in US Treasury bonds. The 5-year and 10-year yields are marginally lower at 4.64% and 4.63%, respectively, while the 2-year yield is trending lower at 4.93%.

Markets anticipate a small acceleration of the Average Hourly Earnings on Friday, but a deceleration of the April Nonfarm Payrolls. The 3.8% unemployment rate is predicted to remain steady.