Currency markets have sold the US dollar to pre-pandemic levels over the last three weeks largely on anticipated economic weakness. Initial jobless claims, which are forecast to show little improvement in the latest week as businesses continue to lay off workers or fail in the uneven economic recovery from the pandemic shutdown, set the tone ahead of Friday’s NFP, FXStreet’s Joseph Trevisani briefs.
Key quotes
“First time filings for jobless benefits are forecast to be 1.408 million in the July 31 week, a small drop from 1.434 in the prior period and exactly where they were six weeks ago on June 26 while continuing claims are projected to dip to 16.839 million from 17.018 million. The low has been 16.151 million the week of July 10.”
“The continuing layoffs represented by the claims numbers may come from struggling and failing small businesses that cannot exist without substantial foot traffic, something still missing in many cities. On the other hand, payrolls may show the growth, expansion and hiring in the larger businesses covered in the improving manufacturing PMI figures and the likely gains in the larger service sector.”
“Currency markets have sold the US dollar against the majors over the last three weeks on expected economic weakness from the second wave of Covid cases. The stalling labor market is a main component of that scenario with Non-farm payrolls on Friday the key metric but claims will set the stage.”
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