- USD Builds Gains on Coronavirus Fears, Investors Remain but Could Slowly Diffuse as Fears Drop
- US Data Sees USD Rally Continue but Today’s Jobs Data Will Be the Real Test
Today marked the release of the US nonfarm payrolls and average hourly earnings. The results which were released at 13:30 GMT, displayed an uptick in values which sent the USD even higher. The nonfarm payrolls for January showed an increase to 225k from 147k from the previous month. Whilst the average hourly earnings grew to 3.1% from 3%. Both values have worked in favour of the USD and has helped the currency cap off a tremendous week of economic releases. The market will now look towards next weeks consumer price index for January and any headlines concerning the coronavirus for the USD’s next moves.
As the week draws to a close, the US dollar remains up top amongst many of its rival currencies following its recent gains. The dollar benefitted from a positive set of data releases yesterday which saw the US Dollar Index (DXY) reach around 98.40, yearly highs. USD will now look to today’s labour market data which is set to be released at 13:30 today for a further boost should figures return positive.
Last week and the start of this week saw USD trading as the leader of the currency market. USD gained heavily off the back of the threat that the coronavirus posed to global trade, especially the Chinese economy. Therefore, currencies linked to the Chinese economy fell as the market experienced a risk-off mood. This helped USD rise as investors took shelter in the currency as a safe-haven and considering the other viable safe-haven currencies were the Japanese Yen and Swiss Franc which are both heavily linked to Chinese trade, USD saw a significant boost.
As the week has progressed, there has been a breakthrough in the research of the virus, with Chinese scientists suggesting that they have found a drug effective in treating patients with the disease. This saw the market’s optimism raise as hopes that the virus could soon be controlled increased. With the market’s fears easing, investors have begun to climb out of the haven USD shelter and begun to take risks once more. As the news surrounding the treatment of the virus continues, it is likely USD will slowly decline as investors re-enter the risk-on market environment.
Yesterday saw the release of the United States’ continuing and initial jobless claims, non-farm productivity and unit labour costs. The initial jobless claims fell around 3% from 217k to 202k, beating predictions of 215k. This suggested that there was a lower number of individuals claiming for the first-time. The figure measures the strength in the labour market and the drop of 15k helped support USD. Meanwhile the other releases remained rather flat and did little to shift USD. The continuing jobless claims saw a slight uptick from 1.703M to 1.751M which suggests that there is still room for improvement in the labour market despite the positive jobless claims result.
Looking forward to later today, the US will see the release of more labour market figures, which will likely hold more weight against the USD exchange rates. The releases will include the nonfarm payrolls, average hourly earnings and unemployment rates for January amongst others. Investors will be keen to observe the results as USD could sharply rise if results are in favour of the US economy.
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