The US dollar is continuing its downward trend on Thursday after the US government reported an increase in initial jobless claims, testing its lowest level in nearly three years. The greenback has entered a bear market, cratering 17% since hitting a peak of 103.00 this past spring. With renewed investor confidence and inflation concerns, the buck could slide even further heading into 2021.

According to the Bureau of Labor Statistics (BLS), the number of Americans filing for first-time unemployment benefits rose to a four-month high of 885,000, coming in higher than the median estimate of 800,000. Last week, initial jobless claims reached 862,000.

Another 455,000 applications were submitted through a temporary federal-relief program, keeping the weekly total to above one million. During the coronavirus pandemic, initial jobless claims have yet to slip below one million.

Meanwhile, continuing jobless claims declined to 5.508 million, and the four-week average, which eliminates week-to-week volatility, climbed above 812,000.

Housing data were also published toward the end of the trading week. Building permits advanced 6.2% to 1.639 million, while housing starts edged up 1.2% to 1.547 million. The Federal Reserve Bank of Kansas City manufacturing index fell to 12, while the Fed Bank of Philadelphia manufacturing index slid to 11.1.

The index continues to get battered by strengthening financial markets and renewed investor confidence. As the coronavirus vaccine rollout begins across the US and the rest of the developed world, traders’ risk tolerance has been heightened. Stocks have also risen on Congress nearing a $908 billion coronavirus stimulus and relief package that includes direct income-support payments and assistance for struggling businesses. At the same time, there are inflation concerns, which were exacerbated after the Federal Reserve stated that the US economy needs a trifecta of stimulus from the central bank, Congress, and the White House.

The US Dollar Index, which gauges the greenback against a basket of currencies, plummeted 0.75% to 89.77, from an opening of 90.27. The index, which is down 7% year-to-date, has not traded this low since April 2018.

The USD/CAD currency pair fell 0.18% to 1.2722, from an opening of 1.2747, at 17:13 GMT on Thursday. The EUR/USD advanced 0.55% to 1.2268, from an opening of 1.2200.