Dollar Loses Further Ground Against Peers
The U.S. dollar drifted lower on Thursday, extending its slide further, amid rising optimism about a coronavirus relief package in the U.S.
The latest batch of economic data and updates on the vaccine front also impacted the currency’s movements.
According to the data released by the Labor Department, initial jobless claims in the U.S. dropped to 712,000, a decrease of 75,000 from the previous week’s revised level of 787,000.
Economists had expected jobless claims to edge down to 775,000 from the 778,000 originally reported for the previous month.
A separate report released by the Institute for Supply Management said that its services PMI edged down to 55.9 in November after dipping to 56.6 in October. Economists had expected the index to slip to 56.0.
The modest decrease by the headline index came as the business activity index slid to 58.0 in November from 61.2 in October. The new orders index also fell to 57.2 from 58.8.
On the other hand, the ISM said the employment index rose to 51.5 in November from 50.1 in October, indicating the third consecutive month of job growth in the service sector.
On the stimulus front, traders continued to express optimism about a potential fiscal stimulus bill after Senate Majority Leader Mitch McConnell, R-Ken., said a “compromise is within reach.”
Both Democrats and Republicans have offered new stimulus proposals, although it remains to be seen if lawmakers will finally reach an agreement after months of stagnation.
The dollar index slid to a low of 90.51 around mid morning, and despite edging higher from that level to 90.68, was still down as much as 0.5% from previous close.
Against the Euro, the dollar weakened to $1.2150, giving up about 0.25% from Wednesday’s close. The euro area private sector economy returned to the contraction zone in November due to a sharp fall in services activity amid the new restrictions to combat the second wave of coronavirus infections, final data from IHS Markit showed.
The services Purchasing Managers’ Index decreased to 41.7 from 46.9 a month ago. According to flash survey, the score was 41.3.
The Pound Sterling was stronger with a unit of Sterling fetching $1.3460, about 0.7% more than a day earlier. The UK private sector contracted less than initially estimated in November despite a second lockdown, final data from IHS Markit showed Thursday.
The Chartered Institute of Procurement & Supply/IHS Markit services Purchasing Managers’ Index dropped to 47.6 in November from 51.4 in October. However, the score was above the flash reading of 45.8.
The Yen strengthened to 103.87 a dollar, firming up from 104.41.
The Aussie was stronger against the dollar, with the pair quoting at 0.7444, gaining nearly 0.4%.
The Swiss franc firmed up to 0.8907 from 0.8946, and the Loonie was up at 1.2860 a dollar, gaining from 1.2918.