Dollar falls broadly on profit taking ahead of key U.S. jobbs report

Market Review - 08/05/2020 00:18GMT  

Dollar falls broadly on profit taking ahead of key U.S. jobbs report

The greenback cut its recent winning streak despite making initial gain on Thursday and ended the day lower against its G7 peers s a rally in U.S. stocks boosted risk sentiment and triggered broad-based profit taking in recent long usd positions. The Dow ended the day higher by 0.89% at 23875.  
  
On the data front, Reuters reported millions more Americans sought unemployment benefits last week, suggesting layoffs broadened from consumer-facing industries to other segments of the economy and could remain elevated even as many parts of the country start to reopen.    
The Labor Department's weekly jobless claims report on Thursday showed initial jobless claims for state unemployment benefits totaled a seasonally adjusted 3.169 million for the week ended May 2, down from a revised 3.846 million in the prior week.    
Economists polled by Reuters had forecast 3.0 million claims in the last week compared to the previously reported 3.839 million in the week ending April 25.  
  
Versus the Japanese yen, dollar snapped its recent losing streak which started from last Friday and found renewed buying at 106.00 in Australia and gained to 106.29 in Asian morning. The pair then ratcheted higher to 106.61 in Europe, then session highs of 116.65 in New York before retreating to 106.23 on improved risk appetite due to broad-based usd's weakness.  
  
Although the single currency recovered to 1.0804 in Asia, then 1.0815 in European morning on cross-buying in euro, renewed selling emerged and the pair fell in tandem with sterling to session lows of 1.0767 in New York morning. The pair then later erased its losses and rallied to 1.0834 on short covering, price last traded at 1.0832 near the close.  
  
The British pound went through a roller-coaster ride. Although cable continued Wednesday's selloff and fell to 1.2309 (Reuters) at Asian open, price found renewed buying and intra-day rise accelerated at European open and briefly spiked to session highs of 1.2418 after Bank of England's hawkish hold. However, the pair erased its gains and tumbled to a 2-week low of 1.2266 before rebounding strongly to 1.2378.  
  
Reuters reported the Bank of England held off further stimulus measures but said it was ready to take fresh action to counter the coronavirus hammering which could cause the country's biggest economic slump in over 300 years in 2020 before a bounceback in 2021.     
The BoE said its Monetary Policy Committee kept Bank Rate at its all-time low of 0.1% and left its target for bond-buying, most of it British government debt, at 645 billion pounds ($797 billion).    However, two of its nine policymakers - Michael Saunders and Jonathan Haskel - voted for 100 billion pounds' worth of more bond-buying firepower.        
In what it called an illustrative scenario, the BoE said it saw a plunge of 14% in Britain's economy in 2020 followed by 15% bounce-back in 2021.     Such a scenario would require very significant monetary and fiscal stimulus, it said.     
Many economists expect the BoE to increase its asset purchase programme next month, before the extra 200 billion pounds it gave itself in March is exhausted by the furious pace of its buying of British government debt.   
  
Data to be released on Friday :  
  
UK GfK consumer confidence, market holiday, Japan all household spending, Jibun Bank services PMI, Germany exports, imports, trade balance, current account, Canada housing starts, building permits, employment change, unemployment rate, and U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, wholesale inventories, wholesale sales.