US dollar is lower across the board this morning as the Libor falls for borrowing dollars and euros. The London interbank market also saw a narrowing in the spread of three-month dollar Libor and overnight index swaps. However, the latest US jobs data might change things; the US dollar is only slightly lower and could easily gain strength if risk aversion rises.
Greenback is mostly lower today, dropping against high beta currencies as it appears that some of the recent market stress has been relieved. However, the latest jobs data shows that unemployment claims are back up near 400,000, breaking the recent trend of lower claims each week. The news is worrying investors, and creating a situation in risk aversion could become very real, very quickly.
On top of that US retail sales didn’t rise as much as expected in December. Analysts were expecting a significant boost from holiday sales, but December’s rise only amounted to 0.1%, a huge disappointment, and mostly due to auto sales. The situation brings back worries that the US economic recovery is going to remain woefully stagnant, and that risk appetite is going to fade.
At 14:19 GMT EUR/USD is slightly higher at 1.2772, up from the open at 1.2708. GBP/USD is higher at 1.5336, up from the open at 1.5329. USD/JPY is slightly lower, down to 76.8300 from the open at 76.8570.
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