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 U.S. unemployment benefits were 627,000 last week, the Labor Department said today. The total amount of new claims was unchanged from the previous week, but the number of workers continuing to claim benefits rose by 170,000 to a record high 4,987,000. It was the fourth straight weekly increase to a new record in this measure.
The increasing numbers for continuing claims indicates there's a virtual hiring freeze, said Matthew Carniol, chief currency strategist at TheLFB-forex.com. With the Fed saying yesterday that employment will remain weak through 2011, expect to see consumption do likewise.
The four-week moving average of claims, which is preferred by economists because it is a less volatile measure, rose to 619,000 last week, the highest level since November 1982, from 608,500 the previous week.
The insured unemployment rate rose to 3.7% from the previous week's 3.6%.
The 4-week moving average for continuing claims was 4,839,500, an increase of 92,500 from the preceding week's revised average of 4,747,000.
Forex Technical Reaction: S&P futures were trading up 1.28% prior to the report and the dollar was higher across the board. S&P futures rose to near the high of the day and the dollar continued to weaken after the report was released.
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