Dollar Gives Up 3-Week Peak Ahead of Jobless Claims By FXNEWSTODAY

FXNEWSTODAY – The US dollar fell in the European market on Thursday against a basket of global currencies, abandoning the highest level in three weeks, and is on the verge of incurring its first loss in the last four days, due to correction and profit-taking activity.

This comes ahead of the release of data in the United States, which provides clear evidence about the health of the American labor market, a day before the November jobs report.

American

The dollar index fell by 0.4% to the level of 103.78 points, from the opening level of today’s trading at 104.15 points, and recorded the highest level at 104.20 points.

Yesterday, Wednesday, the index achieved an increase of 0.2%, the third daily gain in a row, and recorded the highest level in three weeks at 104.23 points, due to strong speculation about the European Central Bank and the Bank of England cutting interest rates before the Federal Reserve.

American interest

Futures pricing for the odds of raising US interest rates by about 25 basis points during the December 12-13 meeting is currently stable at 2%, and futures pricing for the odds of keeping rates unchanged is at 98%.

The pricing of futures contracts for the probability of reducing US interest rates by about 25 basis points during the March 2024 meeting is at 60%, and the pricing of futures contracts for the probability of reducing interest rates by about 25 basis points during the May meeting is at 85%.

Unemployment claims

In order to reprice the above contracts, investors are awaiting later today the release of important data on the labor market in the United States, on weekly unemployment claims, a day before the release of the November jobs report.

Data this week showed gradual signs of a slowdown in the US labor market, with job opportunities falling to the lowest level in two and a half years in October, and contrary to expectations, new jobs in the US private sector declined last month.

Weekly unemployment claims in the United States will be issued at 13:30 GMT, expected at 221 thousand during the week ending December 2, from 218 thousand the previous week.

Expectations

“Various labor market statistics indicate that the labor market in the United States is slowly declining,” said Carol Kong, currency analyst at the Commonwealth Bank of Australia.

“In our view, a sharp weakening in the labor market is needed for financial markets to appreciate the US recession that we have long expected,” Kong added.

David Forrester, a currency strategist at Credit Agricole (EPA), said: “The market is very strongly pricing in federal interest rate cuts until 2024, and so we expect that the decline in this pricing will lead to a stronger US dollar.”

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