Euro to US Dollar - EUR/USD Exchange Rate Gives Up Earlier Gains after US Jobless Claims Data

Modified: Thursday, 4 June 2015 15:16 BST - Written by Ben Hughes

STORY LINK Euro to US Dollar - EUR/USD Exchange Rate Gives Up Earlier Gains after US Jobless Claims Data

Euro to US Dollar Gives Up Earlier Gains after US Jobless Claims Data

The Euro to US Dollar exchange rate gave up some of its earlier gains after data released by the Washington based US Department of Labour showed that the number of individuals filing for initial unemployment benefits fell by 8,000 in the week ending May 30. The overall total dipped to 276,000 from preceding week’s number of 284,000. The fall was larger than the 5,000 that economists had been expecting.

The positive data added to the previous sessions better than forecast ADP jobs report which showed that the US private sector created 201,000 new jobs in May. That number also beat economist expectations for a figure of 200,000 and added to signs that the US labour market is continuing to perform well. Continuing jobless claims also came in positively by coming in at 2196k, a decline from the preceding month’s revised figure of 2226k and was better than economist expectations for a number of 2208k.

‘This suggests businesses really did look through the weakness in the first quarter. The job market continues to do reasonably well,’ said senior economist at Moody’s Analytics Inc.

Further gains for the ‘Greenback’ were restrained however due to a sharp jump in German 10-year bund yields and a separate report which showed that US nonfarm productivity fell more sharply than expected than previously thought in the first three months of the year. If productivity continues to fall inflation could be triggered. The Labour Department said that productivity declined by 3.1% at an annual rate instead of the previously reported fall of 1.9%. The consecutive falls were the first seen since 2006.

The Euro was holding at the 1.12 level as it received a boost early on from a jump in German 10-year bunds. German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar. Yields rise as prices fall. Also offering support to the single currency was yesterday’s announcement by the European Central Bank (ECB) that the threat of deflation has effectively ended. The bank revised its inflation forecast for this year higher to 0.3% from its previous prediction of zero.

Sentiment towards the Euro remains under pressure as a deal was rejected by the Greek government. Members of the ruling Syriza party were said to be furious at the terms offered by the nation’s creditors. Prime Minister Alexis Tsipras said that the nation would be able to repay the €300 million owed to the IMF on Friday.

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