By Peter Nurse
The u.s. dollar remained virtually unchanged on Thursday, the activity on the foreign exchange market has slowed, investors are keeping control before the risk events in the short term.
At 10: 45, the index of the US dollar, which tracks the greenback against a basket of six other currencies, stood at 100,100, virtually unchanged, while EUR/USD rose 0.1 % to 1,0871 and GBP/USD remained unchanged at 1,2390. USD/JPY remained unchanged at 108,85.
The most important data of the day will be entries weekly jobless claims US 14: 30, which became the economic indicator of reference to capture the recent impacts of the virus.
Economists expect the number of claims has decreased slightly compared to the enormous figure of 6.65 million the previous week, but it still increases of 5.25 million, according to forecasts compiled by Investing.com.
They will join the nearly 10 million Americans who have lodged compensation claims since the end of the month of march.
“The markets already know that the economy is hit by shocks extraordinary,” said Tohru Sasaki, head of market research in Japan at JPMorgan (NYSE:JPM), on CNBC. “Even if the number of unemployed persons increases, this will come as a surprise probably that few people, while a better reading could reinforce the perception that the worst is over and trigger a greater reaction in the market.”
The meeting of the Organization of petroleum exporting countries and its allies will also be interesting, as they try to balance an oil market surplus following the drop in global demand due to the outbreak of coronavirus.
Historically, the price of oil is inversely related to the price of the dollar, because when the greenback is strong, it takes less to buy a barrel of oil. However, the price of oil has also become a function of the destruction of demand caused by the epidemic of Covid-19 – the more the global economy came to a halt, over oil has fallen and the dollar has appreciated as a safe haven.
If the major oil producers can come together to agree to reduce supply, which could increase the price of crude oil, the dollar could suffer the consequences.
Finally, the finance ministers of the eurozone meet again to try to agree the best way to put in place a regional strategy of financing of measures to mitigate the crisis.
Disagreements persist about the advisability of issuing joint debts called “coronabonds” in the framework of a recovery plan is broader.
“A move towards the mutualisation of debt seems unlikely at this stage,” said ING (AS:INGA), in a research note. That said, “the impact on the EUR/USD should be limited because (a) expectations are not high for the coronabond anyway (b) at this stage, the risk premium budget is not the main driver of the euro, (c) the stabilization of the appetite for risk should reduce the pressure on the appreciation of the dollar”.