Release Explanation: This report provides the number of people claiming new unemployment benefits and the number of people who are continuing to claim unemployment benefits. Both metrics are provided in weekly and in 4-week moving average form. Very important that economic forecasts are based on the labor market. Economic strength builds from the willingness/confidence of firms to hire, without a strong labor market growth is hard to achieve. Over time the Employment Data will affect all economic releases, it does however take time for labor trends to form. A currency will strengthen or weaken in-line with the other releases that the Employment Data impacts, rather than as a knee-jerk reaction to these numbers printing. Economists tend to look more at the 4-week numbers because weekly numbers can be volatile although the market reacts to the headline numbers initially.

Trade Desk Thoughts: The number of new claims for unemployment benefits decreased 12,000 last week to 646,000, the Labor Department said today, less than the 652,000 economists had expected to see. However, the number of workers continuing to claim benefits the previous week was revised up by 185,000 to 5,473,000, the highest level since the government started keeping track in 1967 and a sign that layed-off workers are finding it very difficult to obtain new employment.

The amount of workers continuing to claim benefits indicates there will be further strains in credit markets, said Matthew Carniol, chief currency strategist at With the Fed expecting that employment will remain weak through 2011, expect to see increasing defaults in credit cards, student loans, auto loans and mortgages.

Continuing claims are up almost one million since the start of the year and have risen by more than two and a half million in the last 12 months.

The 4-week moving average for new claims, which looks to smooth the data, was 654,750, an increase of 3,750 from the previous week's revised average of 651,000.

The 4-week moving average for continuing claims was 5,251,250, an increase of 118,750 from the preceding week's revised average of 5,132,500.

The unemployment rate for workers with unemployment insurance rose 0.2 percentage point to 4.1%, the highest since June 1983.

The U.S. has lost 4.4 million jobs since the recession started in December 2007 with 2.6 million of those losses coming in the last for months alone, including the largest monthly drop since 1949 in December. The unemployment rate currently stands at 8.1%, a 16-year high, but when taking into account those working part-time because full-time work isn't available along with workers who have given up on looking for employment, the percentage of unemployed rises to 14.8%, up nearly 6 percentage points from a year ago.

Forex Technical Reaction: The dollar has been weakening in overnight markets as the world adjusts to the Fed's plan to purchase up to $300 of longer-term U.S. debt. S&P futures were moving higher by 3 points prior to the report and gained 1.5 points afterwards.