FOREX-Dollar holds gains, shrugging off drop in jobless claims
NEW YORK, Sept 3- A report on Thursday showing that the number of Americans filing new claims for unemployment benefits fell more than expected last week did little to dent the safe-haven appeal of the dollar, which earlier in the session hit a week high against the euro. The Labor Department reported that initial claims for state unemployment benefits totaled a…
* Dollar index remains up after better-than-expected data
* Euro earlier hit one-week low against dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E(New throughout; previous dateline LONDON)
By Kate Duguid
NEW YORK, Sept 3 (Reuters) – A report on Thursday showingthat the number of Americans filing new claims for unemploymentbenefits fell more than expected last week did little to dentthe safe-haven appeal of the dollar, which earlier in thesession hit a week high against the euro.
The dollar index dipped slightly following the U.S.Labor Department’s report, but largely held onto the gains itmade this week as the euro has fallen. Analysts suggested thatthe data itself was not strong enough to merit a strong risk-onmove and that a seasonal adjustment may have made the dropappear bigger than it was.
The Labor Department reported that initial claims for stateunemployment benefits totaled a seasonally adjusted 881,000 forthe week ended Aug. 29, compared with 1.011 million in the priorweek. But the figure still remains extraordinarily high, one ofseveral signs that the labor market recovery has been losingsteam as the COVID-19 pandemic continues and government supportlapses.
“The seasonal adjustment issue means we cannot reallycompare initial claims to the prior reads at this moment,” saidIan Lyngen, head of U.S. rates strategy at BMO Capital Markets.
“Our takeaway is that the adjustment methodology makes thedrop in initial claims appear larger than it actually was.”
Earlier, the dollar rose as investors trimmed bets againstthe greenback and sold the euro on concerns that the EuropeanCentral Bank was worried about its rise. The surge has liftedthe greenback about 1.3% above the 28-month low it hit against abasket of currencies on Tuesday.
Few analysts expect it to hold for too long, but the dollargained broadly in Asian trade and will be the first time it hasclimbed three sessions in a row since May.
After the euro touched $1.20 earlier this week, worriesbrewed in the market that the rise had come too fast and strongfor the ECB’s liking.
ECB policymakers reportedly warned that if the euro keepsappreciating it will weigh on exports, drag down prices andintensify pressure for more monetary stimulus.
“Comments by European Central Bank (ECB) chief economist,Philip Lane, (Tuesday) may have marked the first of many verbalinterventions to try and prevent the Euro from strengtheningmuch more from here,” said George Vessey, currency strategist atWestern Union Business Solutions.
The euro was last down 0.13% at $1.184, havingslipped earlier in the session to a one-week low of $1.1789. Thedollar index was up 0.11% to 92.82.(Reporting by Kate Duguid in New York and Olga Cotaga in LondonEditing by Marguerita Choy)
