US dollar firms as US jobless claims slide

Philip McHugh May 17th 2024 - 2 minute read

The US dollar mounted a modest recovery on Thursday, supported by a drop in US initial jobless claims.

Meanwhile, the pound is trading sideways so far this morning, with GBP/EUR flat at €1.1659, and GBP/USD subdued at $1.2661. GBP/CAD is rangebound at CA$1.7249, while GBP/AUD and GBP/NZD hold steady at AU$1.8991 and NZ$2.0695, respectively.

Coming up, will a speech from European Central Bank (ECB) Vice President Luis de Guindos inject some volatility into the euro this morning?

What’s been happening?

The US dollar trended higher during yesterday’s session, following the release of last week’s initial jobless claims.

USD exchange rates strengthened as new unemployment claims fell from 230,000 to 222,000 last week. However, as claims fell slightly less than forecast the US dollar’s gains remained modest in scope.

This upside in the US dollar acted as a headwind for the euro on Wednesday as a result of the negative correlation between the pairing. Leading to only modest gains for the single currency despite a broadly risk-off market mood.

The pound, meanwhile, struggled to attract support during yesterday’s session as it was undermined by the cautious market mood and ongoing Bank of England (BoE) interest rate cut speculation.

What’s coming up?

Looking ahead, a speech by European Central Bank Vice President Luis de Guindos is likely to be the focus for EUR investors this morning.

Guindos could weaken demand for the euro if his comments stoke expectations for a series of ECB rate cuts in the second half of 2024.

This morning will also see the publication of the Eurozone’s latest consumer price index. But barring a divergence from April’s preliminary figures, any impact on the euro is likely to negligible.

GBP exchange rates may be influenced by a speech from BoE official Catherine Mann. As one of the bank’s most hawkish policymakers, could her comments dampen bets for a June rate cut and bolster the pound this morning?

Meanwhile, USD investors will look to a speech by Federal Reserve policymaker Christopher Waller for fresh impetus this afternoon. Will Waller push back on recent rate cut speculation and lift the US dollar?

Written by
Philip McHugh

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