US dollar slides as US jobless claims hit 26 million

Philip McHugh April 24th 2020 - 2 minute read

  • Pound sturdy despite sharp fall in UK services PMI
  • Euro crumbles after abysmal PMIs
  • Erasure of all post-financial crisis US jobs gains drags on US dollar

 
Pound edged higher despite abysmal PMIs
 
Worries over the outlook of the UK economy picked up yesterday thanks to an unprecedented decline in April’s services PMI.
 
The index fell from 34.5 to 12.3 on the month, highlighting the significant pressure which the Covid-19 lockdown has already placed on the economy.
 
However, the pound was able to hold onto a positive footing against both the euro and the US dollar thanks to the underwhelming nature of the day’s Eurozone and US data.
 
Today’s releases were kicked off by the UK’s latest retail sales figures earlier this morning. Sales growth suffered a record contraction in March, which may cap any additional upside in the pound.
 
 
Concerning Eurozone PMIs fuel euro losses
 
The euro tumbled yesterday as April’s preliminary PMIs revealed the Eurozone economy was brought to its knees this month as the coronavirus crisis destroyed economic activity.
 
Further weighing on the single currency was the failure of EU members to agree upon a comprehensive coronavirus recovery package following yesterday’s summit of leaders.
 
Germany’s business climate figures will be in focus this morning. Another decline in sentiment could put the euro under additional pressure before the weekend.
 
 
US dollar weakened by surging unemployment claims
 
The latest US jobless claims figures saw 4.4 million more Americans out of work. This latest jump means all of the job market’s recovery since the financial crisis has now been erased.
 
This naturally left the US dollar on a weaker footing against its rivals, with markets seeing little chance of the US economy rapidly recovering from this damage.
 
USD exchange rates could record further losses this afternoon as forecasts point towards a sharp monthly slump in durable goods orders.
 
Upcoming Data:
 
Friday, 24th April 2020
09:00 EUR German IFO Business Sentiment Index
13:30 USD Durable Goods Orders
 

Written by
Philip McHugh

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