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Forex News: U.S. Dollar Declines On Weak Data, Fed Minutes

U.S. Dollar Declines On Weak Data, Fed Minutes

11/26/2020 - 03:40:00 (RTTNews)

(RTTNews) - The U.S. dollar dropped against its major counterparts in the Asian session on Thursday, as investors reacted to disappointing U.S. economic data and the Fed minutes showing that members held discussions to adjust bond purchases to support the economy.

Data from the Labor Department showed that fist-time claims for U.S. unemployment benefits unexpectedly increased in the week ended November 21.

The initial jobless claims climbed to 778,000, from the previous week's revised level of 748,000. Economists had expected jobless claims to drop to 730,000.

Data from the Commerce Department showed that the spike in gross domestic product in the third quarter was unrevised from the initial estimate.

The Commerce Department said GDP skyrocketed by an annual rate of 33.1 percent in the third quarter after plunging by 31.4 percent in the second quarter. The unrevised reading on GDP matched economist estimates.

The Fed minutes from the November 4-5 meeting showed that members believed the nationwide surge of Covid-19 cases pose "a downside risk to the recovery."

"Participants noted that the Committee could provide more accommodation, if appropriate, by increasing the pace of purchases or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases," the minutes said.

"Alternatively, the Committee could provide more accommodation, if appropriate, by conducting purchases of the same pace and composition over a longer horizon."

The greenback depreciated to near a 3-month low of 1.1941 against the euro and more than a 2-week low of 0.9065 against the franc, from Wednesday's closing values of 1.1912 and 0.9073, respectively. The greenback may locate support around 1.22 against the euro and 0.88 against the franc.

The greenback edged down to a session's low of 104.26 against the yen from yesterday's closing quote of 104.43. The greenback is poised to challenge support around the 100.00 mark.

The greenback dropped to 1.2991 against the loonie, from a high of 1.3008 hit at 7:00 pm ET. Should the currency falls further, it is likely to test support around the 1.25 region.

The greenback fell back against the aussie, heading to pierce its early near a 3-month low of 0.7375. Against the kiwi, the greenback eased to 0.7014 and is on track to pierce a 2-1/2-year low of 0.7015 seen on Wednesday. The next possible support for the greenback is seen around 0.78 against the aussie and 0.72 against the kiwi.

In contrast, the greenback was up against the pound, at 1.3364. This followed a 3-day low of 1.3398 set at 8:30 pm ET. Next key resistance for the greenback is seen around the 1.31 level.

Looking ahead, the European Central Bank releases the account of the monetary policy meeting of the governing council held on October 28 and 29 at 7.30 am ET.

For comments and feedback: contact editorial@rttnews.com

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