Dollar gains broadly on safe-haven buying and rebound in the Dow

Market Review - 02/04/2020  23:38GMT  

Dollar gains broadly on safe-haven buying and rebound in the Dow

The greenback pared intra-day losses made in Asia and Europe and ended higher against majority of its peers for a second day on Thursday and showed relatively muted reaction to a very ugly U.S. initial jobless claims reading as continued concern over prospect of global recession due to spreading of coronavirus led to demand for the safe-haven U.S. dollar.  
  
Reuters reported the number of Americans filing claims for unemployment benefits last week shot to a record high for a second week in a row - topping 6 million - as more jurisdictions enforced stay-at-home measures to curb the coronavirus pandemic, which economists say has pushed the economy into recession.    Initial claims for unemployment benefits rose to 6.65 million in the latest week from an unrevised 3.3 million the previous week, the U.S. Labor Department said on Thursday.     The figures far exceeded the median estimate of 3.50 million in a Reuters survey of economists. Estimates in the survey were as high as 5.25 million.   
  
Versus the Japanese yen, although dollar rebounded from 107.06 in Australia to 107.56 in Asian morning on short-covering, price retreated to 107.03 at New York open after poor U.S. initial jobless claims data, renewed buying interest emerged and price rallied to session highs of 108.09 on intra-day gain in U.S. equities as well as usd's broad-based strength.  
  
The single currency retreated from 1.0968 in Australia to 1.0931 in Asia on cross-selling in euro. Despite rebounding to 1.0964 at European open, the pair met renewed selling and later dropped to a 1-week low of 1.0842 in New York morning before recovering to 1.0899 but only to hit session lows of 1.0821 ahead of the close.  
  
The British pound found renewed buying at 1.2375 in Australia and gained to 1.2432 at European open on cross-buying in sterling. Despite ratcheting higher to intra-day high of 1.2476, cable qucikly erased its gains after failure to re-test last week's 1.2485 high and dropped to 1.2352 in New York morning on usd's strength and later hit session lows of 1.2349 before rebounding to 1.2418 on short-covering.  
  
In other news, Reuters reported Dallas Fed President Robert Kaplan on Thursday said that a possible cut in Russian and Saudi Arabian oil production would be "welcome" in the short-run by the oil industry, but that substantial excess supply will remain a problem.     He also repeated his expectation that U.S. unemployment will leap to the low or mid teens, for 3.5% in February, and that though it should drop to around 8% by year's end, a weakened consumer and small business sector mean it could be a challenge to bring the figure lower, quickly.   
  
Data to be released on Friday :  
  
Australia AIG construction index, retail sales, Japan Jibun Bank services PMI, China Caixin services PMI, France budget balance, Markit services PMI, Italy Markit services PMI, Germany Markit services PMI, EU Markit services PMI, retail sales, UK Markit services PMI, and U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, Markit services PMI, ISM non-manufacturing PMI.