Dollar Slips after Weekly U.S. Jobless Claims Rise More than Expected

The dollar index (DXY00) on Thursday fell by -0.17%.  The dollar Thursday posted moderate losses as signs of a weaker U.S. labor market undercut the dollar after U.S. weekly initial unemployment claims rose more than expected.  The dollar recovered from its worst levels after a slide in stocks boosted the liquidity demand for the dollar.  Also, hawkish comments from Richmond Fed President Barkin pushed T-note yields higher and strengthened the dollar’s interest rate differentials. 

Thursday’s weekly U.S. jobless claims report showed labor market weakness that is bearish for the dollar.  Weekly initial unemployment claims rose +13,000 to 196,000, showing a weaker labor market than expectations of 190,000.  Also, weekly continuing claims rose +38,000 to 1.688 million, showing a weaker labor market than expectations of 1.660 million.

Comments Thursday from Richmond Fed President Barkin were hawkish for Fed policy and supportive of the dollar when he said with inflation in the U.S. still elevated, the Fed needs to "stay the course" to ensure that inflation falls back to its 2% target.

EUR/USD (^EURUSD) on Thursday rose by +0.24%.   Dollar weakness Thursday boosted the euro.  Also, a rally in the Euro Stoxx 50 Thursday to a 1-year high shows confidence in the Eurozone economic outlook and is bullish for EUR/USD.  On the other hand, Thursday’s weaker-than-expected German Jan CPI report is dovish for ECB policy and negative for the euro. 

German Jan CPI (EU harmonized) unexpectedly eased to +9.2% y/y from +9.6% y/y in Dec, weaker than expectations of +10.0% y/y and the slowest pace of increase in 5 months.

USD/JPY (^USDJPY) on Thursday rose by +0.14%.  The yen Thursday fell moderately as it tracked swings in T-note yields.  The yen initially moved higher Thursday on a Bloomberg report that said Japanese Prime Minister Kishida might face a divided party if the new BOJ Governor is someone that’s unlikely to maintain the BOJ’s current ultra-easy policy.  However, the yen relinquished its early gains and moved lower after T-note yields pushed higher.

Thursday’s Japanese economic news was bearish for the yen.  Japan Jan machine tool orders fell -9.7% y/y, the biggest decline in 2-1/4 years. 

April gold (GCJ3) on Thursday closed down -12.20 (-0.65%), and March silver (SIH23) closed down -0.277 (-1.24%).  Precious metals Thursday gave an early advance and posted moderate losses. Metals retreated after T-note yields rose on hawkish comments from Richmond Fed President Barkin, who said the Fed needs to "stay the course" and keep raising interest rates to ensure that inflation falls back to its 2% target.  Also, liquidation of long gold positions in ETFs was bearish for gold after the amount of gold held in ETFs fell to a 2-3/4 year low Wednesday.  Precious metals Thursday initially opened higher on a weak dollar. 

• Stocks Give Up Earlier Gains And Drift Lower
• Dollar Slightly Higher on Hawkish Fed Comments
• Stocks Fall Back on Mixed Earnings and Higher Bond Yields
• Dollar Slips as Stocks Strengthen