Trade Desk Thoughts - Unemployment Claims

Unemployment Claims (Weekly) Actual 588K, Expected 580K, Previous 555K (Revised from 589K)

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: First-time claims for unemployment benefits reached a new record high last week, the Labor Department said today in Washington. The previous record high was made back in the 1982 recession.

Initial claims for jobless benefits rose 3,000 to 588,000 in the week ended Jan. 24. The 4-week average of new claims rose 24,250 to 542,500.

As the job market worsens additional credit losses will occur, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. The IMF yesterday increased its estimate of U.S. credit losses to $2.2 trillion and Nouriel Roubini upped his estimates to $3.6 trillion.

The number of workers continuing to claim unemployment benefits rose 159,000 to 4,776,000, the highest level since the government began tracking the data in 1967. On a 4 week average basis, continuing claims rose to 4,630,000, an increase of 66,500 from last week.

The unemployment rate for workers with unemployment insurance rose 0.2 percentage point to 3.6%, the highest since August 1983.

Forex Technical Reaction: Before the report, S&P futures were recently trading lower by 1.1%. For the day, the euro was lower against the dollar but the pound was higher.

Unemployment