By Yasin Ebrahim
Invesing.com – The dollar shrugged off earlier-day blues on Thursday, as a record jump in jobless claims led some to seek safety in the greenback a day ahead of the nonfarm payrolls report.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.52% to 100.27.
The U.S. Department of Labor reported Thursday that initial jobless claims rose by 3.3 million to a seasonally adjusted 6.6 million, well above economists’ forecast for an increase of 3.5 million.
The sharp rise in initial jobless has set a bearish tone for the nonfarm payrolls report due on Friday, with some keen to assess how deep the coronavirus-impact has been on the hiring in March.
But the report will not be a true reflection of the job losses as "the survey period covered the second week of March, before social distancing and business closures put millions out of work," RBC said.
The dollar was also helped by a plunge in the euro as eurozone wholesale inflation data fell short of expectations, exacerbating fears the economic bloc is set for a deep recession that could rival the Great Recession that unfolded from December 2007 to June 2009.
EUR/USD fell 1% to $1.0844.
"With most eurozone countries in partial or full lockdown, GDP contraction this year is likely to rival the Great Recession," ING said in a note.
The bold claim is not without merit as the European Commission has also flagged similar concerns.
"Assuming an extension of the health crisis up to the beginning of June or beyond, the fall in economic activity in 2020 could be comparable to the contraction of 2009, the worst year of the Economic and Financial Crisis," the European Commission said last month.