The US Dollar (USD) exchange rate strengthened broadly against the Pound (GBP) and recovered from earlier declines against the Euro (EUR) on Thursday after better than forecast US jobless claims data buoyed demand for the ‘Greenback’.
The GBP/USD exchange rate fell to its lowest level in nearly a month and the EUR/USD exchange rate was near its lowest level since the end of last year.
According to the Washington based US Department of Labour, the number of Americans filing for initial jobless claims benefits in the week ending on July 19th fell by 19,000 to an eight-year low of 284,000.
The figure was a further fall and added to the previous weeks drop to 303,000.
The figure was better than economist forecasts for a rise of 5,000 to a total of 308,000.
The data also showed that the number of workers continuing to draw unemployment benefits declined by 8,000 bringing the total number of continuing claimants to a seasonally adjusted 2.5 million.
Fewer benefit claims signal employers are reluctant to let go of staff as the talent pool shrinks and sales improve. A tightening labour market could lift wages and spur consumer spending which accounts for about 70% of the economy.
“The gradual improvement in continuing claims is particularly encouraging and is consistent with recent declines in the unemployment rate, suggesting that unemployed workers continue to find jobs,” said Gennadiy Goldberg, a U.S. strategist at TD Securities.
The positive report eased concerns over the strength of the US labour market and increased pressure upon the Federal Reserve to consider raising interest rates sooner than forecast.
The US Dollar had been receiving solid support after Federal Reserve Chairman Janet Yellen suggested that rates could rise if economic data continues to come in positively, with the claims data coming in strongly expectations for a rate rise increased.
Some economists are warning that claims are likely to rise again next month.
‘I highly doubt that we settle out at such a low level. The last time claims spent more than a week or two below 300k, in 2006, the unemployment rate was well below 5%,’ said the chief economist at Pierpont Securities.
Further gains for the ‘Greenback’ were restrained after Markit’s Flash Manufacturing PMI came in below economist forecasts. The PMI for July came in at 56.3, down from the previous month’s figure of 57.3 and was below expectations for a figure of 57.5.
The Pound was weakened earlier in the session after retail sales data disappointed and caused investors to taper their bets that the Bank of England will raise interest rates before the end of the year.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5888 ,
US Dollar,,Euro,0.7424 ,
US Dollar,,Canadian Dollar,1.0731 ,
US Dollar,,Australian Dollar,1.0602 ,
Pound Sterling,,US Dollar,1.6984 ,
Euro,,US Dollar,1.3470 ,
[/table]
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