Dollar falls before jobless claims, investors await stimulus

The dollar fell 0.47 per cent to ¥110.69 in Asia today. — AFP pic
The dollar fell 0.47 per cent to ¥110.69 in Asia today. — AFP pic

TOKYO, March 26 ― The dollar fell against the yen and the euro today before data expected to show a surge in US claims for unemployment benefits as companies lay off workers due to the rapid spread of the coronavirus.

The pound extended declines against the euro and the dollar due to worries that Britain is not prepared to deal with an increase in coronavirus cases after the flu-like illness ravaged health care systems in Italy and Spain.

The Australian and New Zealand dollars, both of which are closely liked to the global commodity trade, fell against their US counterpart as traders avoided taking on excessive risk.

Investors are anxiously awaiting the passage of a US$2 trillion (RM8.87 trillion) US stimulus package to offset the economic impact of the coronavirus pandemic, but there are already indications that some US states will need more money for medical supplies as the health care system struggles to cope.

“It could be difficult for the markets to digest weekly jobless claims,” said Tohru Sasaki, head of Japan markets research at JP Morgan Securities in Tokyo.

“Bad numbers are expected and priced in to a certain extent, but there are people who think things will get even worse. In the end this may support the dollar as investors choose to bring their money home.”

The dollar fell 0.47 per cent to ¥110.69 in Asia today.

Against the Swiss franc, the dollar eased slightly to 0.9752.

Sterling fell 0.3 per cent to US$1.1837 and fell 0.6 per cent to 92.11 pence per euro.

The pound's losses accelerated early in Asian trade after the British government said the total number of coronavirus cases in the UK rose to 9,529 yesterday from 8,077 the previous day.

US weekly jobless claims due later today are expected to rise to around a million, which would be well above the previous peak seen during the global financial crisis.

Some analysts say jobless claims could even exceed one million as companies are expected to rapidly shed workers.

Draconian restrictions on personal movement aimed at slowing the spread of the coronavirus are widely expected to cause a global recession.

Federal Reserve Chairman Jerome Powell is scheduled to speak on US television at 1100 GMT, which may provide more information about policymakers' response to the pandemic.

Republicans and Democrats in the US Senate are expected to vote yesterday on a US$2 trillion emergency package that US President Donald Trump is expected to swiftly sign the bill into law.

The euro rose 0.2 per cent to US$1.0901 in Asia today. The common currency held on to gains against the Swiss franc, trading at 1.0638.

The German lower house yesterday suspended the country's debt brake and approved a debt-financed supplementary budget of €156 billion to pay for healthcare and keep companies afloat.

Singapore's economy suffered its biggest contraction in a decade in the first quarter, data showed today, as the coronavirus pandemic prompted the city-state to cut its full-year GDP forecast and plan for a deep recession.

The Singapore dollar, which already hit the lowest in more than 10 years on Monday, barely budged after the GDP data. However, the figures are likely to reinforce fears that global activity will sharply contract in the first half of the year. Singapore is one of the world's most open economies.

The Australian dollar fell 1.3 per cent to US$0.5879, while the New Zealand dollar declined by 1 per cent to US$0.5793.

Both the Aussie and the kiwi collapsed to multi-year lows earlier this month as nervous investors liquidated positions in favour of holding their money in the greenback in cash deposits. ― Reuters

Related Articles