The dollar was on the defensive against more growth-sensitive currencies on Thursday, following upbeat U.S. and European economic data, though worries about the coronavirus blunted more aggressive risk taking ahead of upcoming U.S. jobs figures.
The New Zealand dollar led modest gains in Asia, edging ahead by 0.2% to a one-week high of $0.6492.
Against a basket of currencies, the greenback slipped marginally and is tracking toward its worst week in a month, with a 0.4% fall — though it could shift significantly in either direction depending on U.S. jobs data due at 1230 GMT.
Non-farm payrolls figures are expected to show an increase of 3 million jobs last month. But estimates vary widely and the data comes as concerns grow about whether the U.S. economy can sustain its recovery as coronavirus infections surge and some states reimpose limits on business and personal activity.
A miss would probably push U.S. Treasury yields lower, Varathan added, but he said the dollar’s response is less predictable and dependent on whether investors regard hiccups in the U.S. recovery as a challenge to the global rebound.
Similar surveys from China, Germany and France all pointed to an improvement in factory activity, while the ADP National Employment Report showed June private payrolls added nearly 2.4 million jobs.
Still, re-openings are stalling in the U.S. as case numbers surge. New cases of COVID-19, the illness caused by the coronavirus, shot up by nearly 50,000 on Wednesday, the biggest one-day spike since the start of the pandemic.
The safe-haven Japanese yen hung on to overnight gains to hold steady at 107.53 yen per dollar, pointing to elevated investor caution.
Elsewhere the euro changed hands at $1.1257, maintaining its gain of 0.3% since the start of week.
The mood also lifted sterling above $1.25 for the first time in a week, and it last sat at $1.2483, having bounced almost 2% from a one-month low hit on Monday.
Analysts expect the pound could be about 4% stronger in a year’s time, if Britain and the European Union can thrash out a trade deal, a Reuters poll has found.
· This is what unemployment benefits will look like without that extra $600 a week
The CARES Act coronavirus relief law increased unemployment benefits by $600 a week.
That federally funded supplement adds to the traditional benefits provided by states.
Some states pay less. Mississippi, for example, paid $213 a week to the average recipient pre-pandemic.
Without an extension of the $600 unemployment benefit, the average American’s aid would decrease by 61% to about $380 a week, Instead of receiving about $980 a week.
However, that supplement will end after July 31, absent an extension from Congress — which isn’t a given due to opposition from Republican lawmaker
Trump administration wants to replace $600 unemployment benefit with back-to-work bonus
If it ends, benefits will decrease substantially for the nearly 31 million Americans receiving unemployment benefits.
· Record U.S. job growth expected in June, but masks labor market weakness
The U.S. economy likely created jobs at a record clip in June as more restaurants and bars resumed operations, which would offer further evidence that the COVID-19 recession was probably over, though a surge in cases of the coronavirus threatens the fledgling recovery.
The Labor Department’s closely watched monthly employment report on Thursday would add to a stream of data, including consumer spending, showing a sharp rebound in activity.
But the reopening of businesses after being shuttered in mid-March has unleashed a wave of coronavirus infections in large parts of the country, including the populous California, Florida and Texas.
Several states have been scaling back or pausing reopenings since late June and sent some workers home. The impact of these decisions will not show up in the employment data as the government surveyed businesses in the middle of the month.
According to a Reuters survey of economists, nonfarm payrolls likely increased by 3 million jobs in June, which would be the most since the government started keeping records in 1939. Payrolls rebounded 2.5 million in May after plunging by a historic 20.687 million in April.
LAYOFFS STILL ELEVATED
A separate report from the Labor Department on Thursday is expected to show initial claims for state unemployment benefits likely totaled a seasonally adjusted 1.355 million for the week ended June 27 down from 1.48 million in the prior week, according to another Reuters survey of economists.
“Job losses are starting to bleed to other sectors of the economy, income groups and different skill sets,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.
The jobless rate, which is the more standard measure of unemployment, has been biased down since March by people incorrectly misclassifying themselves as “employed but absent from work.” The Labor Department’s Bureau of Labor Statistics has been working with the Census Bureau to rectify this.
Without the misclassification issue, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at about 19.7% in April.
Despite two straight months of eye-popping gains, employment would still be about 16.6 million jobs below its pre-pandemic level. The unemployment rate is forecast dipping to 12.3% from 13.3% in May.
Employment is increasing largely as companies rehire workers laid off when non-essential businesses like restaurants, bars, gyms and dental offices among others were closed to slow the spread of COVID-19.
· Fed's Bullard warns of a financial crisis amid pandemic: FT
St. Louis Federal Reserve president James Bullard told the Financial Times that a wave of “substantial bankruptcies” triggered by the coronavirus pandemic could lead to a financial crisis.
“Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and (that) could feed into a financial crisis,” he told the newspaper in an interview on Wednesday.
“I think it’s probably prudent to keep our lending facilities in place for now, even though its true that liquidity has improved dramatically in financial markets.”
· India's tally of coronavirus infections crosses 600,000
India’s coronavirus infections surpassed 600,000 on Thursday, with 17,834 deaths, as authorities battled to contain the pandemic while easing lockdown rules, officials and the health ministry said.
The increase presents a severe challenge for India’s strained medical capacity and overburdened health system.
An easing phase called “Unlock 2” was announced on Monday, allowing more economic activities to resume even as some densely populated containment zones stay under lockdown.
· Japanese capital sees more than 100 more coronavirus cases: NHK
Tokyo confirmed more than 100 more novel coronavirus infections on Thursday, public broadcaster NHK said, the highest daily tally in two months in the city at the centre of Japan’s outbreak.
The jump comes after the city of 14 million sought to hold new daily cases at fewer than 20 since the government lifted a state of emergency on May 25, only to see its tally consistently exceed 50 over the past week.
Tokyo’s daily count last exceeded 100 on May 2. On Wednesday, it confirmed 67 new cases.
As infections surpass the city government’s target, two weeks into its the final phase of loosening of virus curbs, officials have repeatedly said they see no need to declare a new state of emergency.
· Investors are waking up to a possible Biden victory in U.S. presidential election
Investors are increasingly preparing for market volatility ahead of the U.S. presidential election, with some shifting stock positions and selling the dollar, as Democratic contender Joe Biden maintains a lead against President Donald Trump in opinion polls.
Plenty can change in the four months before the Nov. 3 vote, and many investors remain focused on whether a resurgence of the coronavirus will damage a nascent U.S. economic rebound.
Some money managers, however, are already preparing for the possibility of a Biden victory by betting against the dollar and cutting their positions in U.S. stocks.
· Oil prices gain on fall in crude stockpiles
Oil prices rose on Thursday, reversing early losses, as a sharp drop in oil stockpiles outweighed concerns that a spike in U.S. coronavirus infections and revived lockdown measures in California could stall a recovery in fuel demand.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 25 cents, or 0.6%, to $40.07 a barrel by 0632 GMT, adding to a 1.4% rise from Wednesday.
Brent crude LCOc1 futures was up 25 cents or 0.6% at $42.28 a barrel, after rising 1.8% in the previous session.
U.S. Energy Information Administration data showed U.S. crude inventories USOILC=ECI fell 7.2 million barrels from a record high last week, far more than analysts had expected, as refiners ramped up production and imports eased. [EIA/S]
Reference: CNBC, Reuters, Worldometers
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