In what has been a dreadful week for the USD, Thursday has been relatively positive. Thus far today, the Greenback is showing well against the majors. Gains vs the euro have paced the action as forex players price-in the improving U.S. labor market. With Friday on the horizon, can the dollar post a late-week turnaround?

On the economic news front, the key events for today were the weekly jobless claims numbers. Here is a quick look at the highlights:

Event                                                                              Actual               Projected          Previous

Continuing Jobless Claims (June 26)                         18.062M             18.950M            18.760M

Initial Jobless Claims (July 3)                                        1.314M                1.375M              1.413M

Initial Jobless Claims 4-Week Average (July 3)          1.437M                     NA                 1.500M

In short, unemployment claims remain historically high but are improving. This is likely to continue as the 31 July deadline for the enhanced U.S. COVID-19 benefits rapidly approaches. As the calendar flips to August, be on the lookout for a dramatic drop in jobless claims.

GBP/USD Falls From Weekly Highs

At least for now, the USD is showing some strength vs the majors. However, the weekly performance of the GBP/USD paints a much different picture.

Bottom Line: Make no mistake, the USD is currently on its back foot against the global majors. Extreme fiscal stimulus and FED QE have promoted inflation; tomorrow’s U.S. PPI figures will give us a better idea of where producer prices stand.

In the event we see a Friday pullback in the GBP/USD, I’ll be looking to buy in at 1.2529. With an initial stop at 1.2494, this trend-following trade produces 70 pips on a 1:2 risk vs reward management plan.