Weak jobless claims data fuels strong dollar and lower equities
Initial jobless claims totaled 2.98 million last week, greater than expectations of 2.5 million. The data fueled the risk-off mood already in place overnight, leading to a stronger US dollar, weaker equities, lower bond yields and firm gold prices. Heavyweight hedge fund traders are publicly stating their views that stocks at current levels are largely overvalued.
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May 14, 2020
EUR/USD 1.0792 GBP/USD 1.2191 USD/CAD 1.4130 AUD/USD 0.6419 USD/JPY 106.95 USD/CNH 7.1281 USD/ILS 3.5509 USD/MXN 24.2966 USD/CHF 0.9738 USD/INR 75.5700
Despite worse-than-expected jobless data, US dollar strength is resilient and is extending yesterday’s up day. The broad risk-off mood hit global equity markets hard overnight, and the S&P looks set to open lower here as well. Several top hedge fund operators are sharing their bearish views at current levels after the historic rebound from March’s lows.GBP
The UK pound is lower by nearly 0.5% amid broad dollar strength and after Bank of England Governor Andrew Bailey said he would not dismiss the idea of negative interest rates in the UK.EUR
European equities are all in the red, stock indices down between 1% to 3%. Italy approved a long-expected €55bn package which is meant to support businesses and families in the form of tax cuts and extra funding. After reaching near $1.09 yesterday, the euro has dropped below $1.08 this morning.CADThe Canadian dollar is virtually unchanged overnight despite weak Manufacturing Sales in Canada for March, declining by 9.2% versus -5.7 expected. Oil is higher, trading near $26 a barrel. Traders await the Bank of Canada meeting later this morning. Although no change in rates is expected, traders will be looking for comments on further stimulus in the press release and the BOC’s quarterly Monetary Policy Report.ASIA/PACIFICThe Australian dollar got hit following weak employment data. Australian employers cut workers by a record 594,300 in April. Unemployment rose to 6.2%, below 8.2% expected, but underemployment rose to a record 13.7% and work hours declined by more than 9%. The AUD/USD has been trading mostly in a narrow $0.63 to $0.6550 over the last month.
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