By Peter Nurse
Investing.com – U.S. dollars announced gains in early European trading on Thursday as investors digested the latest coercive comments from the Federal Reserve, while Asian data did not produce any real recovery steps.
At 2:45 pm ET (0645 GMT), the one tracking the greenback against a basket of six other currencies stood at 99.403, up 0.3%, down 0.1% to 1.0962, while rising 0.2%. to 107.76.
Earlier Thursday, a trade report from South Korea, a belt button for global trade, showed exports may be set to fall more than 20% in May for another month. Meanwhile, Japan’s overseas shipments also fell by more than a fifth in April, and a purchasing manager’s index showed that production activity was further weakened in May.
In addition, members of the Federal Reserve said the impact of the coronavirus would “weigh heavily on short-term growth and pose significant reductions to the medium-term economic outlook,” according to the minutes of their April meeting on Wednesday.
An air of positivity had returned to the market as countries began to reopen their economies, but the uncertain nature of these comments, combined with the disappointing data, served to hit risk and sent buyers back to the safe haven U.S. dollar.
Attention now turns to the release of the weekly key U.S. figures for unemployed claims at. 08:30 ET (12:30 GMT) with economists looking for a dip from last week, but a small one, as companies are still forced to shed jobs.
Requirements for first-time unemployment benefits are projected at 2.4 million compared to almost 3 million the week before.
Elsewhere, sterling has continued to be weakened by apparent difficulties in Brexit trade negotiations with the EU, as well as the prospects of negative interest rates, given the likely depth of the economic downturn ahead.
UK Chancellor Rishi Sunak warned earlier this week that the country is facing a “severe recession that we have not seen.”
And that was before the country’s inflation rose to 0.8% in April, the lowest since August 2016.
“[The data] keeps the debate about negative rates alive and kicking, “Kit Juckes, macro strategist at Societe Generale, told CNBC.
02.45.45 ET traded 0.4% lower at 1.2193.
Elsewhere, both central banks in Turkey and South Africa are scheduled to hold political meetings later Thursday, and both are expected to lower interest rates again despite the recent losses their currencies have endured.
Analysis metrics predict that South Africa will lower its key interest rate by 4.25% by another 50 basis points, while Turkey’s central bank is likely to reduce another 50-100 basis points from its repo rate of 8.75%.
02:45 AM ET traded flat at 6.7888, up 0.6% at 18.0291.