By Peter Nurse
Investing.com - The U.S. dollar was largely unchanged Thursday, with activity in the foreign exchange market subdued as investors hold fire amid abundant near term event risk.
At 3:05 AM ET (0705 GMT), the U.S. Dollar Index, which tracks the greenback against a basket of six other currencies, stood at 100.165, largely flat, while EUR/USD rose 0.1% to 1.0861 and GBP/USD was flat at 1.2385. USD/JPY climbed 0.1% to 108.95.
The most important data release of the day will be the U.S. weekly jobless claims, at 8:30 AM ET (12:30 GMT), which has become the go-to economic indicator to capture the latest impact of the virus.
Economists are expecting that claims eased off a little from the huge 6.65 million number the week before, but will still post a rise of 5.25 million, according to forecasts compiled by Investing.com.
They will join the almost 10 million Americans who have submitted claims since the end of March.
“Markets already know that the economy is being hit by extraordinary shocks,” said Tohru Sasaki, head of Japan market research at JPMorgan (NYSE:JPM), on CNBC. “Even if the [unemployment] number increases, it will probably surprise few people while a better reading could enhance the perception that the worst may be over and trigger a bigger market reaction.”
Also of interest will be the meeting of the Organization of the Petroleum Exporting Countries and its allies as they attempt to balance an oversupplied oil market following the slump in global demand on the back of the coronavirus outbreak.
Historically, the price of oil is inversely related to the price of the dollar, as when the greenback is strong you need less to buy a barrel of oil, However, the price of oil has also become a function of the demand destruction caused by the Covid-19 outbreak - the more the global economy has shut down, the more oil has fallen and the more the dollar has appreciated as a safe haven.
If the major oil producers can get together to agree to cut supply, potentially raising the price of crude, the dollar could be adversely impacted.
Finally, eurozone finance ministers are getting together again to try and agree the best way a regional strategy for financing crisis mitigation measures.
Disagreements persist over whether to issue joint debt known as ‘coronabonds’ as part of a wider recovery plan.
“A move towards debt mutualization seems unlikely at this point,” said ING, in a research note. That said, the “impact on the EUR/USD should be limited as (a) expectations are not high for the coronabond anyway (b) at this point, the fiscal risk premium is not the main driver of the euro, (c) stabilizing risk appetite should ease appreciation pressure on the dollar.”