US Dollar (USD) Exchange Rate Booms After Best Unemployment Data in Eight Years
The US Dollar (USD) is currently trading up at 0.5882 against the Pound (GBP), reaching session highs of 0.5884, and lows of 0.5864.
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Conversely the US Dollar is currently trading against the Euro (EUR) at 0.7424 reaching its pinnacle so far this session at 0.7443.
The US Dollar is likely to see positive movement in the latter half of Thursday as Initial Unemployment Claims and Continuing Claims data proved favourable.
The US economy saw only 284K initial claims, far lower than the forecast 310K, and even lower than the previous week’s 303K. Furthermore Continuing Claims data surprised with only 2500K participants whereas economists had predicted a rise of up to 2510K.
With Federal Reserve Chairwoman, Janet Yellen, recently commenting that any interest rate hikes in the US would be fuelled by positive employment data, investors will be eyeing the drop in unemployment claims carefully.
As a result the US Dollar has risen to its highest level in over a month, allowing it to gain against other major currency peers. The unemployment data has highlighted its lowest level in eight years which should cause the US Dollar to rally.
An expert in the field Brad Bechtel stated: ‘The momentum was already headed this way in the Dollar US equities—the data helps it along, it confirms what people had already been doing. Monetary policy remains ultra-accommodative and the economy is cruising along in the right direction.’
Such favourable data will only allow interest rate speculation to grow amongst experts. Although Yellen refused to be confined to a formula regarding the hikes, she’s allowed some encouragement for the US Dollar.
Yellen stated: ‘If the labour market continues to improve more quickly than anticipated by the [Fed], then increases in the federal-funds rate target likely would occur sooner and be more rapid than currently envisioned.’
Conversely President for the Federal Reserve in Kansas City commented: ‘Today’s economy, with a strengthening labour market and rising inflation, is ready for a more-normal rate environment. Waiting too long may allow certain risks to build that if realised, could harm economic activity.’
With such favourable data, that betters 8 years of unemployment, the US Dollar should see positive gains this week. Other majors are likely to become bearish as the possibility of US rate hikes loom closer in light of positive statistics.
The GBP to USD exchange rate is currently trading at 1.6985, whilst the Euro is presently trading at 1.3471 against the US Dollar.