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US dollar retreats from two-week high

USD - United States Dollar

The US dollar fell from a two-week high before bouncing back slightly after better than expected jobless claims data. The US Dollar Index fell 0.3% to 91.02 at the time of writing.

Jobless claims fell to 498,000 last week, falling below 500,000 for the first time since March 2020, according to The Department of Labor’s report. Focus now turns to Friday’s monthly jobs report. Analysts expect an increase of 978,000 non-farm jobs in April.

Treasury Secretary Janet Yellen backed off her earlier comments about inflation nudging up, while Federal Reserve officials offered little to suggest a policy change might be imminent. Members Loretta Mester and Richard Clarida both toed the party line, affirming the Federal Reserve's commitment to accommodative monetary policy while directly dismissing calls to taper bond purchases.

Key Movers

The Bank of England sees a faster than anticipated economic recovery for the UK and held interest rates steady. The central bank raised its 2021 growth outlook to 7.25%, up from a forecast of 5% in February. The central bank said it would cut back its bond-buying each week to 3.4 billion pounds, down from 4.4 billion pounds a week. Sterling initially fell on the announcement but regained against the US dollar and the euro.

Investors are also watching the Scottish parliamentary elections. If the Scottish National Party manages to achieve a majority, the chances of a Scottish independence referendum is high. This result could negatively impact GBP, as without Scotland, the British economy weakens.

The Australian dollar dropped overnight after China suspended economic dialogue with Australia, but rebounded back to 0.7752.

Expected Ranges

EUR/USD: 1.199 - 1.206 ▲

GBP/USD: 1.386 - 1.393 ▼

AUD/USD: 0.770 - 0.776 ▲

USD/CAD: 1.219 - 1.228 ▼