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Forex News: Dollar Falls On Expectations For More Fed Rate

Dollar Falls On Expectations For More Fed Rate Cuts

03/05/2020 - 09:42:00 (RTTNews)

(RTTNews) - The U.S. dollar came under pressure against its major counterparts in the European session on Thursday, as markets are pricing in another rate cut from the Fed at the March meeting after its surprise reduction this week.

The Fed is expected to deliver another 25 bps cut at its March 17-18 meeting to counter coronavirus impact.

The central bank has already implemented an emergency 50-basis-point cut on Tuesday, taking the federal-funds rate to between 1 percent and 1.25 percent.

Rise in coronavirus infections in the U.S. and the declaration of a medical state of emergency in the state of California dampened sentiment.

In economic news, the Labor Department released a report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended February 29th.

The report said initial jobless claims edged down to 216,000, a decrease of 3,000 from the previous week's unrevised level of 219,000. Economists had expected jobless claims to slip to 215,000.

Meanwhile, revised data released by the Labor Department showed U.S. labor productivity increased by less than initially estimated in the fourth quarter of 2019.

The report said labor productivity climbed by 1.2 percent in the fourth quarter compared to the previously reported 1.4 percent jump. Economists had expected the pace of productivity growth to be unrevised from the initial estimate.

The Labor Department also said unit labor costs rose by 0.9 percent in the fourth quarter, reflecting a notable downward revision from the originally reported 1.4 percent spike. The increase in labor costs was also expected to be unrevised.

On Friday, the Labor Department is scheduled to release its more closely watched employment report for the month of February.

Employment is expected to increase by about 175,000 jobs in February after jumping by 225,000 jobs in January, while the unemployment rate is expected to hold at 3.6 percent.

The greenback dropped to a 2-day low of 1.1200 against the euro, from Wednesday's closing value of 1.1134. The greenback is likely to challenge support around the 1.14 mark.

Survey data from IHS Markit showed that Germany's construction sector grew for a sixth consecutive month in February to its strongest level in over two years, led by a robust residential building activity and an improving commercial activity sector.

The IHS Markit Germany Construction Purchasing Managers' Index, or PMI, rose to 55.8 from 54.9 in January. The latest reading was the best since January 2018.

The USD/CHF pair hit 0.9510, a 2-year low. The greenback is seen finding support around the 0.94 area.

The greenback depreciated to a 5-month low of 106.80 against the yen, from a 2-day high of 107.74 seen at 6:45 pm ET. Versus the pound, it dropped to a weekly low of 1.2936. Further downside, the support is possibly located near 104.00 against the yen and 1.31 versus the pound.

In contrast, the greenback rebounded to 0.6591 against the aussie and 0.6287 against the kiwi, from its early multi-day lows of 0.6637 and 0.6334, respectively. The next likely resistance for the greenback is seen around 0.64 against the aussie and 0.60 against the kiwi.

The greenback was higher against the loonie at a 3-day peak of 1.3433. If the greenback gains again, 1.36 is possibly seen as its next resistance level.

The U.S. durable goods orders for January are scheduled for release at 10:00 am ET.

For comments and feedback: contact editorial@rttnews.com

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