Unemployment Claims (Weekly) Actual 626K, Expected 585K, Previous 591K (Revised from 588K)
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: New claims for unemployment benefits rose by 35,000 to 626,000 for the week ending Jan 31, the Labor Department said today, to the highest level since October 1982. The 4-week average of initial claims, which smoothes the data, rose by 39,000 to 582,250, the most since December 1982.
As the job market worsens additional credit losses will occur, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. The IMF last week 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 who were continuing to claim benefits rose by 20,000 to 4,788,000, which is the most since records began being kept in 1957. The unemployment rate for insured workers remained at 3.6%, a 25-year high.
Forex Technical Reaction: Before the report, S&P futures were trading lower by 0.2%. The dollar was higher against the euro and yen, but was declining against the pound and Australian dollar. After the report, S&P futures declined to a 1% loss while the dollar gained on the higher-yielding currencies and fell to the yen.