US Dollar Strengthens on Initial Jobless Claims, Fed Minutes

The  US dollar is strengthening against a  few currencies at  the  end of  the  trading week, buoyed by  another decline in  initial jobless claims and  a  central bank that is unlikely to  do anything on  interest rates. But disappointing housing numbers put a  cap on  the  buck’s ascent.

According to  the  Bureau of  Labor Statistics (BLS), the  number of  Americans filing for  unemployment benefits tumbled by  1,000 to  211,000 in  May. This is down from the  previous week’s 212,000 and  it beats the  market forecast of  219,000.
US manufacturing continues to  falter as  growth slumped to  a  decade low this month, driven primarily by  fears over the  US-China trade war. The  May IHS Markit US Manufacturing Purchasing Managers’ Index (PMI) fell to  50.6, down from 52.6 in  April. It was also a  full point lower than the  median estimates.
Real estate is another sector that might be cooling down, even in  the  middle of  the  busiest buying season of  the  year. New home sales in  April slipped 6.9% after expanding by  a  stellar 8.1% in  March.
Investors might now be relieved that there will unlikely be a  case of  â€œwill they or  won’t they?” when it comes to  interest rates. According to  minutes from the  Federal Open Market Committee (FOMC)’s May 1–2 meeting, members agreed that a â€œpatient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time.”
In  other words, the  Federal Reserve is unlikely to  pull the  trigger on  a  rate hike or  a  rate cut anytime soon, providing some certainty in  the  equity market. That said, Fed officials are comfortable where the  target range – 2.25% to  2.50%  â€” is for  the  time being.
But it should be pointed out that the  policymaking meeting took place just before US-China trade talks fell through.
The  US Dollar Index dipped 0.07% to  97.78, recording a  weekly loss of  0.2%. Year-to-date, the  index has risen 1.7%.
The  USD/CAD currency pair slid 0.16% to  1.3451, from an  opening of  1.3474, at  11:29 GMT on  Friday. The  USD/GBP plunged 0.23% to  0.7883, from an  opening of  0.7901.

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