The worst expansion of jobless insurance claims in the United States ever has seen the US dollar turn lower on concern about the toll the coronavirus is having on the economy.
The Australian dollar is building some upward momentum after having lost 13% of its value over the prior two weeks and crashing to 17-year lows in the process.
AUD/USD was higher by 88 pips (+1.53%) to 0.6046 with a daily range of 0.5870 to 0.6071 as of 5pm GMT.
The currency pair slipped below 0.59 in early trading but quickly rallied back beyond 0.60 to hold onto week to date gains of +4.2%.
Australian dollar keeps upward momentum
Momentum and positive sentiment were the primary drivers pushing the Australian dollar higher on Thursday. While the US dollar turned lower on the disappointing US economic data, Wall Street was on target for a third straight day of gains in a sign of improved investor confidence since the Senate agreed its £2 trillion economic support package.
However inside Australia, the new measures being put into place to prevent the spread of the coronavirus are taking their toll on the economy. Australia could soon increase its response to ‘stage 3 lockdowns’ after Prime Minister Scott Morrison finishes his G20 conference call meeting today.
US dollar slides after jobless claims data
All eyes were on US weekly jobless claims data today and they didn’t disappoint on shock value.
The additional number of Americans claiming jobless insurance from the government was the highest ever at 3.28 million. As a point of reference, the 4-week average prior to this release was 228,000 and the previous highest total was 695,000 from 1982 and during the financial crisis it was 665,000.
The dollar is still well up over the past month and sitting close to 3-year highs but the extent of the hit to the US economy itself may not be fully priced into FX markets. Many more companies will likely have to make layoffs to stay afloat as footfall drops to close to zero thanks to the coronavirus.