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Dollar Down Over Disappointing U.S. Data, Bleak Economic Outlook

ForexSep 18, 2020 12:55AM ET
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By Gina Lee – The dollar was down on Friday morning in Asia, with disappointing U.S. employment data dampening both the economic outlook and investor sentiment.

The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, inched down 0.05% to 92.927 by 12:48 AM ET (5:48 AM GMT).

The employment data, released on Thursday, showed that initial jobless claims fell slower than expected. 860,000 claims were filed over the past week against the predicted 850,000.

Investors are still digesting the U.S. Federal Reserve’s policy decision, handed down on Wednesday, which pledged low interest rates for years to come while also upgrading its 2020 GDP forecast.

The USD/JPY pair inched up 0.07% to 104.80. The Bank of Japan (BOJ) keeping its monetary policy steady, as widely expected, as it handed down its policy decision on Thursday.

“The dollar/yen dropped overnight almost too much, although it’s been falling since Monday,” Mizuho Securities chief currency strategist Masafumi Yamamoto told Reuters.

Another rout in U.S. tech stocks on Thursday also contributed to a weak dollar. “For the dollar to regain its upward trend, it’s necessary for the market to make sure that the U.S. stocks take a pause from a correction in stock prices,” Yamamoto added.

The AUD/USD pair inched up 0.08% to 0.7318 and the NZD/USD gained 0.41% to 0.6782.

The USD/CNY pair edged down 0.11% to 6.7556. Although the yuan has risen more than 6% from late May’s lows against the greenback as the Chinese economy continues its recovery from COVID-19, some investors are raising concerns over the rapid rise.

The GBP/USD edged down 0.10% to 0.1259. The Bank of England (BOE) announced its own policy decision on Thursday, dangling the possibility of negative interest rates to counter rising numbers of COVID-19 cases, higher unemployment and the possibility of a hard Brexit. However, European Commission President Ursula Von der Leyen indicating that she was “convinced a trade deal with Britain was still possible” gave the pound a boost.

Dollar Down Over Disappointing U.S. Data, Bleak Economic Outlook

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