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Dollar Forex Market Strength Remains as Sentiment Cools - Securities.io

  • Sterling and Euro Gain Slightly but Remain Pressured
  • US Jobless Claims in Focus 
  • Wall Street Lower Even on Impressive Earnings

The US dollar remains strong heading toward the end of the week with inflation concerns hurting market sentiment. This appears evident not only in the forex market but in equities too. Both the Euro and Sterling gained ground on yesterday but it has only been marginal and both currencies also have domestic concerns of their own to contend with. Today also brought a fresh round of US jobless claim numbers with analysts’ expectations of a move lower being correct. This may help stimulate Wall Street with the main indices opening lower despite continuing positive numbers from earnings season.

Dollar Strength Remains Intact

The Dollar remains strong today with the Euro in particular under pressure and still below the key 1.19 mark although it had been lower. A supportive message from Fed Chief Jerome Powell when he spoke yesterday will have given the Euro some well-needed backing. Powell maintained his stance on the recovery, particularly on jobs, and did not change his tone on tapering with no plans to alter bond purchases at the moment.

Despite the dovish tone the Fed has taken, the Dollar has not fallen back entirely. Those forex trading may have started to take a more cautious line even as the support remains. The clearly increasing inflation numbers may it difficult to ignore no matter how much Powell is sticking to his agenda.

New Low Point for Jobless Claims

In what could be seen as evidence to prove Powell’s upbeat attitude on employment, US jobless claims dropped again this week. In numbers just released by the Labor Department, initial claims for unemployment are down to 360,000 which is a drop of more than 20,000 on the previous week’s number, and a new pandemic-era low. This is a significant fall that is in line with expectations.

The number for continuing claims has also posted an impressive drop of more than 120,000 to an overall figure which is still high above 3 million but in keeping with the downward trend of recent weeks.

Big Earnings Fail to Spark Stocks

Earnings figures are coming in thick and fast on Wall Street for the previous quarter and have been broadly impressive, particularly from the major banking names including the likes of JP Morgan and Goldman Sachs. This has not stopped markets from being flat to slightly negative though as concerns around overheating persist. All the major US indices are down this morning with the NASDAQ suffering most. The tech-heavy index showing that not only forex brokers are noticing a shift in the market.

The Dow Jones had started the day down more than 100 points but has recovered to trade flat for the day with most eyes on the continuing testimony of Jerome Powell today and whether he gives any further insight that could influence the market.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.