US Dollar (USD) Exchange Rate Forecast to Strengthen despite Disappointing Labour Market Data
The US Dollar to Euro (USD/EUR) exchange rate advanced by around 0.44% on Thursday afternoon.
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The US Dollar to Pound Sterling (USD/GBP) exchange rate edged higher by around 0.20%.
Despite the fact that US labour market data produced disappointing results on Thursday, the US Dollar strengthened versus the majority of its most traded currency rivals. The surge can be linked to traders looking ahead to US Non-Farm Payrolls data, due for publication on Friday, which is forecast to improve.
The US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9057.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6564.
US Dollar (USD) Exchange Rate Advances on Policy Divergence
As the European Central Bank (ECB) prepares to launch quantitative easing, and with the Bank of England (BoE) holding their Asset Purchase Target, the fact that the Federal Reserve ended the long program of quantitative easing supported a US Dollar surge.
‘This (ECB 1 trillion Euro programme) would not be so Euro negative if the Federal Reserve were doing the same thing but not only did the US central bank end its QE last October, but they are looking to take the next step and raise interest rates,’ said Kathy Lien, managing director for forex strategy at BK Asset Management.
With Friday’s US Non-Farm Payrolls forecast to improve, Thursday’s disappointing domestic data had minimal impact on ‘Greenback’ (USD) movement. Initial Jobless Claims saw 320,000 new claimants, eclipsing the median market prediction of 295,000. In addition, Continuing Claims was unable to meet with the market consensus of 239,500 claimants, with the actual data showing 242,100. The increase in claims has been attributed to unusually cold weather which saw claims from workers in construction rise, for example.
‘Last week was much colder than usual, with more than twice the snowfall of the previous week,’ Ian Shepherdson, Newcastle-based economist said. ‘This week too has seen significant snow in the eastern half of the country, so claims likely won’t revert to trend, which is about 290,000, for another couple of weeks.’
US Dollar (USD) Exchange Rate Forecast to Hold Gains
Given that domestic data had minimal impact, the US Dollar is likely to hold gains for the remainder of Thursday’s trade. Friday will see increased US Dollar volatility with influential labour market data due for publication. This will be particularly important considering the Fed policymakers stated that rate revisions would be subject to data publications. Change in Non-Farm Payrolls and Unemployment Rate will be of significance to those invested in the ‘Greenback’.
The US Dollar to Euro (USD/EUR) exchange rate was trending within a range of 0.9002 to 0.9079.
The US Dollar to Pound Sterling (USD/GBP) exchange rate was trending within a range of 0.6547 and 0.6568 on Thursday.