- ECB stimulus boosted risk sentiment lifting risk sensitive Australian Dollar (AUD)
- US jobless claims +1.88 million, weakest level in 11 weeks
- US non farm payrolls in focus, -8 million job losses forecast
- At 03:30 UTC, AUD/USD is trading at +0.5% at US$0.6956
After a slow start the Australian Dollar is charging higher versus the US Dollar. The Aussie US Dollar exchange rate is advancing for a sixth straight session on Thursday as risk appetite remains elevated.
At 15:30 UTC, AUD/USD is trading +0.5% at US$0.6956. This is at the top end of the daily traded range of US$0.6883 – US$0.6958 following a reduction in the number of US jobless claims and more stimulus from the European Central Bank.
The broad mood in the market improved markedly following an announcement by the ECB that it will expand its bond buying programme launched to support the countries worst hit by the coronavirus crisis in the eurozone. The programme, the Pandemic Emergency Purchase Programme will be increased by €600 billion, as the central bank attempts to prevent the region from slipping into a deflationary spiral.
Whilst the extra stimulus doesn’t directly impact Australia, it has boosted risk sentiment, lifting the risk sensitive Aussie Dollar.
The Aussie Dollar had struggled to maintain gains in early trade after data overnight confirmed that retail sales slumped a record breaking -17.7% in April.
US Data has also helped to buoy risk sentiment towards the end of the week. The number of Americans who filed for unemployment benefits for the first time last week increased by 1.88 million, taking the total number of claims to 43 million since lock down began in mid March.
Jobless claims slowed for the 9th straight week and recorded the first week below 2 million since the coronavirus lockdown began 11 weeks ago.
Continuing claims, which count the number of people actually receiving benefits edged higher to 21.5 million. The slowdown in the pace of jobless claims indicates that some people are returning to work as lock down measures are eased and economies re-open. This suggests that the worst has been passed, which boosted risk sentiment and dragged on the US Dollar
Investors will now look ahead to the release of US non-farm payrolls tomorrow. Analysts are expecting 8 million jobs to have been lost in May, compared to 20.5 million in April.
