Dollar Slides on Softer Economic Data

USD

The dollar index which measures the greenback against a basket of major currencies fell to 90.45, erasing early-week gains on weaker economic data. Recently, the Federal Reserve highlighted strongly the weakness in the labor market with the unemployment rate not showing the real picture, and expressed its commitment to fight unemployment at the price of having an overshoot in inflation. The US Initial Jobless claims rose by 861 thousand, despite the recent drop in Covid19 cases. This reading was another alarm to investors on the sluggish status of the labor market, which would force the Federal Reserve to do more. The EURUSD rose to $1.2113, the GBPUSD rallied to $1.3985, and the AUDUSD appreciated to $0.7802.

Equities

Major US stock indices extended losses amid sluggish labor market data and rising Treasury yields. The initial jobless claims rose significantly, implying the Federal Reserve should do more to improve employment figures. Meanwhile, the US Treasury yields recovered from their last dip from the top, with 10-year yields inching again above 1.30%. These factors weighed on investors' risk appetite, where the Dow Jones Industrial Average futures fell to 31301, the S&P500 futures declined to 3889, and Nasdaq futures dipped to 13549.

Metals

Precious metals prices drifted lower as Treasury yields recovered, pushing real yields higher again. The price of a gold ounce dropped to $1760, the price of a silver ounce fell to $26.48, and palladium futures tumbled to $2324, while platinum hovered near $1250.

Oil

Oil prices declined from their highest levels in thirteen-month on chatters of the US and Iran going back to the negotiation tables. European sources mentioned that this could happen soon, easing investors' nerves on any supply issues from tensions. On the other hand, the continuing cold snap in Texas cut refineries' demand. The US Energy Information Administration report which showed a decline of 7.3 million in crude inventories, failed to build a rebound. The West Texas Intermediate crude March contract dropped to $58.56, and the Brent blend April contract fell to $62.09.

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