Dollar Dips Across the Board; Jobless Claims Hit Pandemic Low

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Dollar Dips Across the Board; Jobless Claims Hit Pandemic Low

OCTOBER 14, 2021

The U.S. dollar is getting trounced across the board this morning, losing against nearly all of its G10 counterparts. 

Overview

Global equity markets are mostly in the green as traders are shaking off concerns about higher energy prices, stubborn inflation pressures, and supply chain issues.  Multiple media outlets are saying traders at hedge funds are taking profits after the recent USD rally, adding to the dollar’s sell-off.

This morning’s data showed more signs of an improving labor market.  Weekly jobless claims fell to 293K last week, beating estimates of 320K jobs.  The print is a new pandemic low but still far higher than pre-covid norms. Continuing claims also beat out expectations.

A separate report showed continued inflation pressures, albeit slightly lower than economists had forecast.  U.S. September producer prices rose 0.5%, which is a touch less than the 0.6% forecasts by economists.  The year-over-year number is 8.6%, also just under estimates. The data comes after consumer price data earlier this week that showed inflation growing at a fast pace.

What to Watch Today…

  • No major economic events scheduled for today

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EUR  

The Euro bounced higher on widespread U.S. dollar weakness and reached levels not seen in almost two weeks.  The Euro modest rebound comes despite continued dovishness from the European Central Bank, especially compared to its American and British counterparts.  ECB President Christine Lagarde said in a statement that it is “crucial” to not withdraw support too early.  The ECB’s Pandemic Emergency Purchase Programme (PEPP) is set to expire at the end of Q1 2022.

EUR/USD remains near its weakest level in over a year.

CAD  

The Canadian dollar continued its positive momentum against the U.S. dollar.  The loonie gained over half a percent versus the greenback, touching its strongest level in three months.  The price of WTI oil advanced over a percent to break $81 a barrel.

The Canadian economic docket showed manufacturing sales rose 0.5% month over month in August, beating estimates of a 0.3% gain.   The positive data has only been slightly beneficial to the loonie’s strength.

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