Dollar Sheds Ground Against Major Rivals

By | January 31, 2020
Dollar Sheds Ground Against Major Rivals

The U.S. dollar lost ground against most of its rivals on Thursday, as traders reacted to the Bank of England’s monetary policy statement and data showing an improvement in Euro zone manufacturing confidence.

The dollar index edged lower and dropped to a low of 97.79 a little past noon, and despite recovering some lost ground, was still down well below the flat line at 97.86, down 0.14% from previous close.

Against the Euro, the dollar weakened to $1.1035, losing about 0.21%. Eurozone economic confidence reached a seven-month high in January and the unemployment rate hit the lowest in more than a decade in December, data showed Thursday.

The economic sentiment index rose more-than-expected to 102.8 in January from 101.3 in December, survey results from the European Commission revealed. This was the highest reading since June 2019 and above the forecast of 102.0.

The dollar was down more than 0.5% against Pound Sterling, with a unit of sterling fetching $1.3094, compared to $1.3021 on Wednesday. The Bank of England today kept its interest rate and quantitative easing unchanged, as widely expected, as the economy showed early signs of picking up.

The interest rate now stands at 0.75% and the quantitative easing at GBP at 435 billion.

The BoE expects inflation to remain below the 2% target throughout this year. It is then expected to rise towards the target over 2021 and reach 2% in the first quarter of 2022.

Against Japanese Yen, the dollar was down slightly at 108.96 yen.

The dollar was down against Swiss franc and the loonie, at 0.9699 and 1.3194, respectively. A leading indicator of the turning points in Switzerland’s economy climbed for a second straight month in January to reach just above 100, survey data from the KOF Swiss Economic Institute showed on Thursday. Economists had forecast a reading of 96 for January.

However, against the Aussie, the dollar gained nearly 0.5%. The AUD-USD pair was last seen at 0.6722.

A report released by the Labor Department showed fist-time claims for U.S. unemployment benefits decreased from to 216,000, from an upwardly revised 223,000 in the previous week. Economists had expected jobless claims to inch up to 215,000 from the 211,000 originally reported for the previous week.

A report from the Commerce Department said U.S. economic growth in the fourth quarter continued at the same pace as in the previous quarter, climbing 2.1%. That was in line with economist estimates.