The US dollar index (DXY) is rising today as traders focus on news on stimulus and the disappointing jobless claims data from the United States. The index is trading at $93.74, which is slightly higher than this week’s low of $93.50.
US jobless claims data disappoint
The US labour force has been going through its worst performance in decades. On Friday last week, data showed that the economy added more than 661,000 jobs in September while the unemployment rate dropped to 7.2%. The number meant that the economy had more than 9 million less people in the labour force than in February.
And today, data showed that the number of Americans filing for initial jobless claims continued to drop last week. According to the Bureau of Labour Statistics (BLS), ~840,000 Americans filed for jobless claims for the first time. The figure was better than the revised reading of 849k in the previous week.
At the same time, the number of people continuing to take claims dropped to 10.9 million from the previous 11.9 million. Analysts polled by Reuters expected the number to come in at 11.4 million.
Analysts believe that the labour market will continue cooling down through the rest of the year as the number of coronavirus cases continue to rise. Indeed, in the past few months, some of the country’s biggest employers have announced plans to slash jobs.
General Electric is slashing more than 13,000 jobs in its aviation division. Boeing, the biggest plane-maker in the world is cutting more than 16.000 jobs while Disney is reducing the number of its workers by 28,000. Small and medium-sized companies are the worst-affected.
The situation has been worsened by congress, which has struggled to pass a stimulus package in the past few months. On Tuesday, Donald Trump announced that he would postpone the stimulus talks until after the election. He has since changed his mind and insisted on smaller stimulus packages. On this, he has requested congress funds for the $1,200 stimulus checks, funds for airlines, and the enhanced paycheck protection program.
US dollar index technical outlook
The US dollar index is trading at $93.74. On the daily chart, the price has moved above the 50% Fibonacci retracement level. It is also slightly above the 25-day weighted moving average. It has also managed to move above the descending trendline that connects the highest points in August and September and the lowest levels in October. Therefore, I suspect that the index will continue rising as bulls aim for the September high of $93.89.
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