The U.S. dollar exhibited strength against most of its rivals on Thursday as reports showing a surge in new coronavirus cases in several states of America and many other countries dimmed risk appetite and supported the greenback’s uptick.
Markets were also reacting to reports about easing of bank restrictions on investment activities, the data on U.S. durable goods orders, the ECB minutes and economic data from Europe.
According to reports, the Federal Deposit Insurance Commission officials said they would loosen restrictions from the Volcker Rule, a post-financial crisis law designed to stop banks – which received federal and taxpayer bailouts – from engaging in risky trading activities.
The report in Bloomberg also says that regulators will ease margin requirement for swaps trades that could free up an estimated $40 billion for Wall Street banks.
The dollar index, which rose to 97.60 early on in the session, later dropped to 97.37 but was still holding in positive territory, gaining about 0.22%.
Against the Euro, the dollar strengthened to $1.1223, from Wednesday’s $1.1251. Minutes from the European Central Bank’s June meeting showed that policymakers agreed that purchases of government bonds under the pandemic emergency purchase programme and the asset purchase programme were an effective tool for delivering the price stability goal in the current environment.
ECB policymakers broadly agreed to increase the size of the PEPP by ?600 billion and extend the horizon for net purchases under the scheme to at least the end of June 2021, observing that expanding the size would help support the smooth transmission across the euro area, it added.
The Pound Sterling was little changed with a unit of sterling fetching $1.2426, compared with $1.2421 last evening. The dollar was earlier down at 1.2465 a sterling, but subsequently strengthened to 1.2391 before losing ground again.
Against the Yen, the dollar was slightly up, fetching 107.13 yen, compared with 107.04 yen Wednesday evening.
The Aussie was gaining against the dollar with the pair trading at 0.6888 as against previous close of 0.6869.
The Swiss franc was last seen at 0.9481 a dollar, not much changed from previous close of 0.9479. Earlier in the day, the franc slipped to a low of 0.9508.
The Canadian Loonie recovered from mid-session lows after oil prices moved higher. The loonie was quoting at 1.3641 against the dollar a little while ago, recovering from a low of 1.3670.
Data from the Labor Department showed first-time claims for U.S. unemployment benefits dropped to 1.480 million, a decrease of 60,000 from the previous week’s revised level of 1.540 million. Economists had expected jobless claims to tumble to 1.300 million from the 1.508 million originally reported for the previous week.
A report released by the Commerce Department on Thursday showed the slump in U.S. economic activity in the first quarter was unrevised from the previous estimate. The report said real gross domestic product tumbled by 5% in the first quarter, unchanged from the estimate provided last month and in line with expectations.
Another report from the Commerce Department said new orders for U.S. manufactured durable goods spiked by 15.8% in May after plunging by a revised 18.1% in April. Economists had expected durable goods orders to surge up by 10.9% compared to the 17.7% nosedive that had been reported for the previous month.
In coronavirus news, the U.S. broke its record for the highest coronavirus cases recorded in a single day, with 36,358 new positives reported on Wednesday, according to a tally by NBC News.
With some southern and western states reporting record number of coronavirus cases, New York, New Jersey and Connecticut have asked visitors from nine states with high infection rates to quarantine for 14 days.
The International Monetary Fund’s report on Wednesday cut its global growth forecast for this year and next and said the pandemic was causing wider and deeper damage to economic activity than first thought.
The IMF projected the global economy to shrink by 4.9% in 2020, compared to a 3% contraction expected earlier.