The early batch of US data - released at 8:30 AM ET - came in better than expected as we saw another drop in jobless claims and a leading measure of manufacturing improved.

Labor Market Continues to Show Improvement

First, in a continued positive development for the US labor market, initial jobless claims fell to 366K, the best reading since February, and continues a trend that started in October. However, because of the holidays we'll see if this sharp decline will be revised as more data comes in.width=400

Still, this is exactly what we want to see from jobless claims as we have not only moved below and held the 400K level, we continue to see a downward trend. This suggests that the recent nonfarm payroll report gains that we saw should continue in the following month(s).

NY Empire Shows Modest Gains

In a look at the manufacturing sector, the NY Fed Empire manufacturing index climbed to 9.6 beating forecasts of a rose to 3.0, and up considerably from Novembers 0.6 reading. Both current conditions and general business conditions rose.

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A Risk-On Day

Today's reports show improvement in both the labor market as well as in manufacturing - positive signs that the momentum in the US economy that we have seen recently is continuing.

width=400That should be a positive for the stock market after this week's route on the back of the failed EU summit and it could give a chance for commodity currencies and other higher yielders to pare some of this week's losses against the dollar and yen.

The data also continues to suggest a growth divergence between North America and the major economies in Europe and Asia. while the US dollar is unlikely to benefit unless we have the positive changing the mind of the FOMC in regards to future quantitative easing, the currency that is set to take advantage of this growth divergence over the next month or months is the Canadian dollar. The USD/CAD fell to 1.0320 following the releases.

While we may have a tentative risk on day as suggested by the data we have to be concerned about today's action simply being a pullback to more attractive prices for selling higher yielders as a result of general risk aversion around the European situation.

- Nick Nasad is the Chief Market Analyst at FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.