Dollar Turns Weak After Initial Strength

Dollar Turns Weak After Initial Strength

After staying firm against its peers for much of the day’s session, the U.S. dollar began paring gains and even turned negative against a few currencies on Thursday.

Surging coronavirus cases in the U.S., Europe and several countries in the Asia-Pacific region, fresh lockdown measures imposed at several places, and the latest batch of economic data set the trend for the currency’s movements.

New York City public schools are returning to remote learning for all 1.1 million students, signaling that a second wave of the coronavirus has arrived. In Minnesota, Governor Tim Walz announced a month-long stop to social gatherings, gyms and indoor service at bars and restaurants as the virus spread spiked to a record high.

U.S. land borders with Canada and Mexico are expected to remain closed to non-essential travel until Dec. 21 amid a rising number of U.S. coronavirus cases.

The drag from new U.S. restrictions was amplified by the total lack of progress on a fiscal stimulus bill, with New York Federal Williams warning that a loss of fiscal support could slow economy in the coming months.

It is now being speculated that the Federal Reserve would expand its asset-buying campaign at a December policy meeting.

The dollar index, which advanced to 92.72 in the Asian session, later started drifting lower and was last seen at 92.26, down marginally from previous close.

Against the Euro, the dollar was firmer till about a couple of hours past noon, but weakened to $1.1877 later, giving up nearly 0.2% from previous close.

The Pound Sterling was little changed at $1.3270, after having strengthened to $1.3198 earlier in the day.

The Yen was up slightly at 103.74 a dollar, recovering from 104.22 a dollar in the Asian session.

The Aussie was weaker, fetching US$0.7291 a unit, down from US$0.7305 on Wednesday.

The Swiss franc was firmer at 0.9104, gaining from 0.9115 a dollar, while the Loonie firmed up to 1.3054 from 1.3081 a dollar.

In U.S. economic news, data from U.S. Labor Department showed initial jobless claims climbed to 742,000 in the week ended November 14, an increase of 31,000 from the previous week’s revised level of 711,000.

A report released by the National Association of Realtors showed existing home sales jumped by 4.3% to an annual rate of 6.85 million in October after soaring by 9.9% to a revised rate of 6.57 million in September. Economists expected existing home sales to slump by 1.4%.

A reading on leading U.S. economic indicators increased in line with economist estimates in the month of October, according to a report released by the Conference Board. The CB said its leading economic index climbed by 0.7% in the month, matching the increase seen in the previous month as well as expectations.

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