USD Pinned Lower on Weak Labor Markets, Flat at a Two-Week Low
The greenback slid lower on Thursday, retreating from its bullish advance and dropping to a two-week low on news of weaker than expected U.S. labor markets. More specifically, the USD's contraction follows a report that more people applied for weekly unemployment claims. It comes after confirmation of last week's weaker Non-Farm Payment (NFP) report that dents economists' hope of the economy bouncing back faster.
Traders are closely watching how the U.S. labor markets will perform in the next few months. Although policymakers are bullish, expecting the greenback to bottom-up from the one-year low. Nonetheless, the greenback remains on a back foot, printing lower versus major currencies. Some analysts also argue that a strong U.S. economy and reflation via an accommodative monetary policy means better opportunities in emerging economies, weakening the greenback. Inflation is already flat-lining, dampening an exodus away from the USD to other safe havens, conflicting development that deflates investors' greenback confidence.
Impact on the USD:
Bearish. The greenback is backpedaling as sellers unwind gains of the previous weeks. Even though the U.S. economy stands to recover, the weak labor market portends trouble for the world's reserve currency buyers.
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