U.S. Dollar Declines On Weak Data, Fed Minutes
November 25 2020 - 10:40PM
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The U.S. dollar dropped against its major counterparts in the
Asian session on Thursday, as investors reacted to disappointing
U.S. economic data and the Fed minutes showing that members held
discussions to adjust bond purchases to support the economy.
Data from the Labor Department showed that fist-time claims for
U.S. unemployment benefits unexpectedly increased in the week ended
November 21.
The initial jobless claims climbed to 778,000, from the previous
week's revised level of 748,000. Economists had expected jobless
claims to drop to 730,000.
Data from the Commerce Department showed that the spike in gross
domestic product in the third quarter was unrevised from the
initial estimate.
The Commerce Department said GDP skyrocketed by an annual rate
of 33.1 percent in the third quarter after plunging by 31.4 percent
in the second quarter. The unrevised reading on GDP matched
economist estimates.
The Fed minutes from the November 4-5 meeting showed that
members believed the nationwide surge of Covid-19 cases pose "a
downside risk to the recovery."
"Participants noted that the Committee could provide more
accommodation, if appropriate, by increasing the pace of purchases
or by shifting its Treasury purchases to those with a longer
maturity without increasing the size of its purchases," the minutes
said.
"Alternatively, the Committee could provide more accommodation,
if appropriate, by conducting purchases of the same pace and
composition over a longer horizon."
The greenback depreciated to near a 3-month low of 1.1941
against the euro and more than a 2-week low of 0.9065 against the
franc, from Wednesday's closing values of 1.1912 and 0.9073,
respectively. The greenback may locate support around 1.22 against
the euro and 0.88 against the franc.
The greenback edged down to a session's low of 104.26 against
the yen from yesterday's closing quote of 104.43. The greenback is
poised to challenge support around the 100.00 mark.
The greenback dropped to 1.2991 against the loonie, from a high
of 1.3008 hit at 7:00 pm ET. Should the currency falls further, it
is likely to test support around the 1.25 region.
The greenback fell back against the aussie, heading to pierce
its early near a 3-month low of 0.7375. Against the kiwi, the
greenback eased to 0.7014 and is on track to pierce a 2-1/2-year
low of 0.7015 seen on Wednesday. The next possible support for the
greenback is seen around 0.78 against the aussie and 0.72 against
the kiwi.
In contrast, the greenback was up against the pound, at 1.3364.
This followed a 3-day low of 1.3398 set at 8:30 pm ET. Next key
resistance for the greenback is seen around the 1.31 level.
Looking ahead, the European Central Bank releases the account of
the monetary policy meeting of the governing council held on
October 28 and 29 at 7.30 am ET.
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