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: For the week ending Jan. 3, there were 467,000 new claims for unemployment benefits, a decrease of 24,000 (-4.88%) from last week's revised total of 491,000. The 4-week moving average of initial claims was 525,750, a decrease of 27,000 (-4.88%) from last week's revised total of 552,750.
New claims hit a three month low, said Matthew Carniol, chief currency strategist at TheLFB.com. However, continuing claims are at the highest level since November 1982 which points to a poor report with Friday's NFP report.
The insured unemployment rate was unchanged at 3.4%
The number of people continuing to claim unemployment benefits was 4,611,000, an increase of 101,000 (2.23%) from the preceding week's revised level of 4,510,000. The 4-week moving average was 4,470,000, an increase of 45,000 from the preceding week's revised average of 4,425,000. The 4-week moving average of continuing claims was 4,470,000, an increase of 45,000 (1.01%) from the preceding week's revised average of 4,425,000.
Forex Technical Reaction: S&P futures were rising off their lows of the day after the report. The dollar moved into risk aversion mode; the greenback fell against the euro and pound but rose on the yen.