U.S. Dollar Drops Over Further Stimulus
The U.S. Dollar dropped broadly and below the $100 mark after the rise in jobless claims. The United States was to move forward on its $2.2 trillion relief package. Due to the rise in jobless claims, investors anticipate the U.S. government and the Fed to take further steps.
The U.S. dollar index, which tracks the greenback against a basket of other currencies, was down at 0.11% to 99.435.
The GBP/USD pair was up 2.8% earlier. However, as Asian FX markets opened, it went down 0.11% to 1.2188.
In forex trading, the National Bank of Australia analysts warned asset managers may need to adjust their currency hedge positions.
These were wild swings in global share prices, and they might need to buckle up for an extremely rocky ride.
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The U.S. Dollar After the Massive Lay Off
The coronavirus pandemic prompted companies across the United States to lay off an estimated 250,000 to 4 million workers.
Overnight, the U.S. recorded an unprecedented 3.28 million unemployment benefits claims for the past week. The number has been the highest increase ever.
Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey said, “The number sent chills through the markets.”
“If these numbers continue for three or four weeks, there will be demand for more fiscal support,” he said. “And even more monetary support from the Fed,” he added.
Federal Reserve Chairman Jerome Powell said the U.S. “may well be in recession.” However, progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen.
Stocks rallied for the third day despite the number, as investors expected additional stimulus. The U.S. Senate backed a $2.2 trillion bill to deal with the fallout of the COVID-19 pandemic.
It is also aimed at helping workers and industries hit by the virus.
Moreover, the relief package will also be used to provide billions of U.S. dollars to buy medical equipment.
In more forex news, the dollar fell further as the stimulus package will likely ease concerns of a global recession. It is also set to substantially increase the Fed’s balance sheet.
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