Euro US Dollar (EUR/USD) Exchange Rate Jumps as US Joblessness Skyrockets
UPDATE: The Euro US Dollar (EUR/USD) exchange rate jumped by around 0.6%, leaving the pairing trading at around $1.0950.
The US Dollar suffered losses today after US jobless figures rose by a larger-than-forecast 3.283 million in a week.
Over three million Americans signed on for unemployment last week as the coronavirus pandemic hit the job market. This was a historically low figure, shattering the previous record of close to 700,000 claims in 1982.
Euro US Dollar (EUR/USD) Exchange Rate Edges Higher as US Companies Rapidly Shed Workers
The Euro US Dollar (EUR/USD) exchange rate rose by around 0.5% this morning, leaving the pairing trading at around $1.0943.
The US Dollar slumped on Thursday ahead of data that is expected to show a jump in US unemployment claims.
The coronavirus is expected to cause US weekly jobless claims to soar by around a million. This is far higher than the last peak seen during the global financial crisis.
Some expect the jobless claims to rise higher than a million as companies have been rapidly shedding workers.
Commenting on this, Tohru Sasaki, head of Japan markets research at JP Morgan Securities in Tokyo:
‘It could be difficult for the markets to digest weekly jobless claims.
‘Bad numbers are expected and priced into a certain extent, but there are people who think things will get even worse. In the end this may support the Dollar as investors choose to bring their money home.’
Meanwhile, investors await the passing of a $2 trillion US stimulus package. This is designed to help with the economic impact of the coronavirus pandemic.
However, confidence has been rocked as some US states may need further funding for medical supplies.
US President Donald Trump is expected to sign the bill into law, although a Senate vote has not yet been scheduled.
Germany Morale Plummets to Lowest in Over a Decade
The single currency was able to extend its gains today despite data revealing that German morale plummeted to its lowest level since the global financial crisis.
According to data released by GfK, its forward-looking consumer confidence index plummeted to a worse-than expected 2.7 from 8.3.
Commenting on the data, GfK’s consumer expert, Rolf Bürkl said:
‘In light of the current development, we are withdrawing our consumer forecast of one percent growth for 2020. Retailers, manufacturers and service providers must prepare for a recession.
‘How severe this recession will be will ultimately depend on when the economy finds its way back to normality. A reliable forecast regarding consumption can only be made once we can predict how long the protective measures to combat corona will remain in place.
‘As a result of the wide spread of the virus and the associated restrictions, the German economy has come to a complete halt in a very short space of time.’
Euro US Dollar Outlook: US Jobless Claims in Focus
Looking ahead to this afternoon, the US Dollar (USD) could suffer further losses against the Euro (EUR). If Q4 final GDP data disappoints, the ‘Greenback’ could edge lower.
Added to this, if jobless claims in the US skyrocket, seeing more than a million people left unemployed, the Dollar will suffer losses.
Meanwhile, Friday’s Italian business and consumer confidence could weigh on the single currency, seeing it give up some of today’s losses.
If confidence plummets and US jobless claims skyrocket, the Euro US Dollar (EUR/USD) exchange rate will be left muted.
