The U.S. dollar paused after 10 days of losses
Shafaq News/ The U.S. dollar paused on Friday after its biggest loss in 10 days as disappointing U.S. Labour market data bruised optimism for a speedy recovery from the COVID-19 pandemic.
According to Reuters, The greenback continued to buck its traditional role as a safe-harbor currency, falling in sympathy with U.S. stocks overnight after an unexpected increase in weekly jobless claims soured the economic outlook.
The British pound traded near an almost three-year high reached overnight, when it surged the most in more than a month, amid Britain’s aggressive vaccination program.
The dollar index was little changed at 90.561 in the Asian session, after a 0.4% decline overnight cut short a two-day winning streak. For the week, the gauge is now back to more or less break-even.
The string of soft Labour data is weighing on the dollar even as other indicators have shown resilience, and as President Joe Biden’s pandemic relief efforts take shape, including a proposed $1.9 trillion spending package.
“The prospect of a massive U.S. fiscal stimulus plus a successful vaccine roll-out are solid arguments to bet on a U.S. recovery this year,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank in Sydney, wrote in a client note.
“But the overnight jobless claims data serve as a reminder of the unevenness of the recovery so far.”
Sterling was mostly flat at $1.3965 on Friday following a 0.8% jump in the previous session, when it rose as high as $1.3986 for the first time since April 2018.
The euro was little changed at $1.2093 after rising 0.4% overnight.
The dollar bought 105.555 yen, little changed following a two-day retreat from the five-month high of 106.225 reached Wednesday.
Many analysts expect the dollar to weaken over the course of the year as it has traditionally done during times of global economic recovery, though it might take some time to develop.
“It looks to me like there’s some exhaustion in that just-straight global reflation theme,” leading the dollar to trend largely sideways for now, said Daniel Been, head of FX at ANZ in Sydney.
The trade should reignite once fiscal stimulus starts to kick in and services start to reopen in a more fulsome way, he said.
“We see it broadly as a dollar-negative story,” he said.
In crypto currencies, Bitcoin traded at $51,335.71, consolidating for a second day after hitting a record $52,640 on Wednesday in a rally fuelled by endorsements from Tesla Inc and others. It has risen about 78% so far in 2021, after more than quadrupling last year.
Smaller rival Ethereum rose to a record $1,951.89 on Friday, just piping the previous day’s high, before trading at $1,909.41. It has surged some 162% this year.
On Thursday, chipmaker Nvidia Corp announced a new processor designed specifically for mining Ethereum.