- USD heads for the best performing week in three months
- S&P 500 closed high as market cheers over improving employment situations
- GBPCAD rallies as BoE downplayed possibilities of negative interest rates
The US Dollar is ready to have its highest weekly gain in three months as Friday comes, encouraged by increasing confidence that investors have over the US economic recovery. Most investors are anticipating that the recovery speed will outpace many of its global peers. The Dollar Index has also refreshed its two-month high, renewing highs against the Euro and Yen, amid signals of a strong labor market. The Dollar Index drifted slightly higher to 91.576 on Thursday, reaching 91.60 for the first time since last December. Analysts and investors are now considering whether a strong dollar is a temporary position or a long-lasting shift away from the dollar pessimism in 2020.
In terms of the job market in the US, Thursday’s data revealed that 779k initial jobless claims were filed over the past week, lower than the forecast at 830k and also lower than the previous release at 812k. Later in this week on Friday, we will also have non-farm payrolls as the biggest event to test the economic health. Due to this positive news, S&P 500 closed high during Thursday’s trading session. The small-cap Russell 2000 index and Nasdaq Composite registered 1.98% and 1.23% gain respectively.
Elsewhere in the FX market, GBPCAD rallied sharply upon Bank of England’s announcement. The central bank anticipated that economic performance would be much stronger than previously forecasted and this belief helped them downplay the possibility on negative interest rates. They expected that the demand on the Pound will be renewed and it was not necessary to cut down rates. In Canada, on the other hand, worries over the unemployment rate may weaken the currency against its peers. Evidence shows that fewer Canadians are now active within the labor market, leaving the national economy vulnerable.