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Dollar Down, With Rising U.S. Unemployment Casting Doubt on Speed of U.S. Recovery

Published 08/05/2020, 10:06 PM
Updated 08/05/2020, 10:12 PM
© Reuters.

© Reuters.

By Gina Lee

Investing.com – The dollar was down on Thursday morning in Asia, continuing its retreat over worries about the pace of the U.S. economic recovery from COVID-19.

The ADP Nonfarm Employment record released on Wednesday suggested increasing unemployment as it reported a sharp decrease in payrolls growth in July, with 167,000 jobs created during the month compared to the 4.314 million jobs created in June.

Meanwhile, the Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers' Index (PMI) for July was 58.1, beating June’s 57.1 reading, but the same survey showed decreased levels of hiring.

“Dollar-selling seems to have resumed. We are having the same structure we saw in July... although the headline figure from the [ISM] survey was strong... while ADP data was weak. These point to downside risks to Friday’s payroll data,” Shinichiro Kadota, senior strategist at Barclays (LON:BARC), told Reuters.

With more than 30 million Americans already claiming unemployment benefits, the latest rise in unemployment indicates a slowdown in U.S. economic recovery.

Investors are now looking to the latest unemployment benefits figures, due to be released later in the day.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies was down 0.05% to 92.778 by 10:01 AM ET (3:01 AM GMT).

Another cause for concern is the continuing deadlock in the U.S. Congress over the latest stimulus measures. With both Republicans and Democrats hardening their stances as the end-of-week deadline to reach an agreement nears, doubts remain as to whether the two sides will reach an agreement.

The USD/JPY pair inched down 0.03% to 105.53.

The AUD/USD pair was up 0.06% to 0.7195, while the NZD/USD pair fell 0.09% to 0.6639.

The USD/CNY pair jumped 0.14% to 6.9450.

The GBP/USD pair gained 0.14% to 1.3130. The Bank of England is widely expected to refrain from taking any further action as it convenes for its policy review later in the day. The benchmark interest rate is expected to remain at 0.1%, a record low, and the bank is also expected to make no changes to its bond-buying stimulus program.

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