US dollar supported by drop in jobless claims
Philip McHugh July 21st 2023 - 2 minute read
The US dollar trended higher on Thursday as it was underpinned by surprisingly positive US labour data.
Meanwhile, the pound finds modest support so far this morning, with GBP/EUR buoyed at €1.1574 and GBP/USD ticking up to $1.2894. GBP/CAD is rangebound at CA$1.6960, while GBP/AUD and GBP/NZD hold steady at AU$1.9005 and NZ$2.0687, respectively.
Looking ahead, will upbeat UK retail sales figures help Sterling close the week on a positive note?
What’s been happening?
The US dollar strengthened yesterday, following the publication of the latest US initial jobless claims.
Thursday’s release showed new unemployment claims unexpectedly fell last week. The upbeat figures suggested the US labour market may be a little stronger than investors previously thought.
Reinforcing the US dollar’s gains was a strong uptick in US Treasury yields.
While it was undermined somewhat by its negative correlation with the US dollar, the euro was still able to find support on Thursday.
This was largely driven by the Eurozone’s latest consumer confidence figures, which reported morale in July improved more than expected to reach a 16-month high.
Meanwhile, the pound was left on the defensive yesterday, with the currency coming under further pressure as GBP investors continued to reassess their bets for future Bank of England (BoE) rate hikes.
What’s coming up?
The only data release of note today is the publication of the UK’s latest retail sales figures.
Their release earlier this morning sees the pound open the session on the front foot, after revealing the warm weather in June helped sales growth spike to a four-month high.
In the Eurozone a lull in data could see the euro struggle to find any strong directional bias today, as EUR investors turn their focus to the European Central Bank’s (ECB) rate decision next week.
Finally, in the absence of any notable USD economic releases, movement in the US dollar through the end of the week is likely to be driven by risk appetite. Will an improving market mood see the US dollar face headwinds?
Written by
Philip McHugh