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Tumbling oil prices boost US dollar, pound firm after jobs data

currency-newsTumbling oil prices boost US dollar, pound firm after jobs data
The US dollar rallied on Monday as a collapse in US oil prices rocked markets and saw investors favour safe-haven assets.

Meanwhile, the pound is holding its ground this morning, with GBP/EUR flat at €1.1449 and GBP/USD muted at $1.2412. GBP/CAD is stable at C$1.7582, while GBP/AUD and GBP/NZD hold steady at AU$1.9642 and NZ$2.0698 respectively.

GBP investors will get their first insight into how the coronavirus crisis is impacting the UK jobs market this morning with the publication of the UK’s latest claimant count.

What’s been happening?

The US dollar found itself back in vogue at the start of this week’s session as souring market sentiment buoyed the appeal of the safe-haven ‘greenback’.

This was triggered by a sharp plunge in US oil prices, with WTI crude actually falling below zero for the first time in history.

Negative prices mean that oil producers are actually paying buyers to take the commodity off their hands amid growing concern that US storage facilities are nearing max capacity as a result of plummeting global demand during the coronavirus crisis.

In contrast the pound kicked off the week on the defensive, retreating in response to the UK government’s apparent reluctance to begin easing its lockdown measures.

Prime Minister Boris Johnson’s is reported to be concerned that lifting restrictions too soon could put the UK at risk of a second wave of infections.

Meanwhile, the euro traded in a narrow range on Monday as doubts over EU unity persisted ahead of this week’s virtual EU summit.

What’s coming up?

While the coronavirus crisis will remain an ongoing concern for investors there is a host of data which may also influence currency markets today.

First up was the UK’s latest jobs report, published earlier this morning. The pound firmed following a far lower increase in people claiming unemployment benefits in March than markets had feared.

For EUR investors the focus will be on the latest ZEW economic surveys. Will the euro tumble as economic sentiment in the Eurozone hits fresh lows in April?

Finally, in the US the publication of March’s housing figures may dampen the appeal of the US dollar on the expectation of a sharp drop in existing home sales.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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