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Dollar Scores Strong Gains As Risk Sentiment Wanes On Growth Concerns, Virus Fears

The U.S. dollar climbed higher against most of the major currencies on Thursday as worries about global growth and rising tensions between the U.S. and China significantly curbed risk sentiment.

Reports showing a sharp jump in coronavirus infections raised fears of a second-wave of the pandemic.

The dollar index, which opened marginally up, eased to 95.95 early on, but gained in strength and firmed up to 96.80 later on in the day, adding nearly 0.9% to its previous close.

Against the Euro, the dollar firmed up to $1.1294, from Wednesday’s close of $1.1378.

The Pound Sterling was weaker by about 1.2% with a unit of sterling trading at $1.2591. The Yen firmed up to 106.85 a dollar after having settled at 107.12 a dollar on Wednesday evening.

Against the Aussie, the dollar was stronger at 0.6850, after closing at 0.6998 a day earlier.

The Swiss Franc was little changed at 0.9442 a dollar, after having weakened to 0.9460 earlier in the session, while the Loonie tumbled to 1.3624 a dollar following the sharp over 8% slide in crude oil prices.

New infections have been reported in Arizona, Texas, Florida and California, triggering warning of a potential second round of infections in the country.

Federal Reserve Chairman Jerome Powell warned of “a long road” to recovery and said the Fed’s rescue efforts will not be enough on their own, and it would likely require additional fiscal stimulus from Congress to stave off a deeper economic downturn.

The Federal Reserve’s weak outlook for the U.S. economy this year amid the impact of the coronavirus pandemic hit global stock markets hard and knocked the wind out of crude oil as well.

In economic news today, a report from the Labor Department said initial jobless claims tumbled to 1.542 million last week, a decrease of 355,000 from the previous week’s revised level of 1.897 million. Economists had expected jobless claims to slump to 1.550 million from the 1.877 million originally reported for the previous week.

Jobless claims declined for the tenth straight week after reaching a record high of 6.867 million in the week ended March 28th.

Another report from the Labor Department said the producer price index for final demand climbed by 0.4% in May after tumbling by 1.3% in April. Economists had expected the index to inch up by just 0.1%.

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