US dollar rallies as US jobless claims fall

Philip McHugh February 23rd 2024 - 2 minute read

The US dollar recovered from its initial losses on Thursday, following a surprise drop in US unemployment claims.

Meanwhile, the pound is trading sideways this morning, with GBP/EUR flat at €1.1696, and GBP/USD stable at $1.2665. GBP/CAD is rangebound at CA$1.7069, while GBP/AUD and GBP/NZD hold steady at AU$1.9265 and NZ$2.0421, respectively.

Coming up, will an improvement in German business sentiment help to bolster the euro today?

What’s been happening?

The US dollar initially slumped yesterday, as a tech stock boom bolstered market risk appetite and soured investors on the safe-haven ‘greenback’.

USD exchange rates then rebounded in the afternoon following the publication of the latest US initial jobless claims.

A surprise drop in new unemployment claims last week, was seen as encouraging the Federal Reserve to keep interest rates on hold and triggered the rebound in the US dollar.

The euro found modest support on Thursday with the release of the Eurozone’s latest PMIs, after February’s preliminary figures reported the recent five-month contraction in the bloc’s services sector finally came to an end.

The pound, meanwhile, was left rangebound yesterday, despite the UK’s own PMI figures reporting growth in the service sector matched January’s eight-month high.

What’s coming up?

Looking ahead, the spotlight today will be on Germany’s latest IFO business climate index.

Today’s release is forecast to report business sentiment in the Eurozone’s largest economy began to improve again this month, which may lend support to the euro.

In the meantime, confirmation that Germany’s economy contracted by 0.3% in the last quarter of 2023 is dragging on the single currency at the start of today’s session.

Meanwhile, in the absence of any UK and US economic data of note, both GBP and USD are likely to be driven by market risk dynamics.

If the week closes on a positive note this may see the increasingly risk-sensitive pound trend higher, while limiting demand for the US dollar.

Written by
Philip McHugh

Select a topic: