The latest weekly jobless claims data remain consistent with a labor market where layoffs are limited and those who lose their jobs are taking slightly longer to find new employment.
Initial jobless claims: 206K versus 205K expected
Prior week: 207K, revised from 206K
Four-week average: 206K versus 207.5K previously
Continuing claims: 1.774M versus 1.780M expected
Prior week: 1.775M, revised from 1.779M
Four-week continuing-claims average: 1.779M versus 1.78075M previously
Insured unemployment rate: 1.2%, unchanged
The initial claims number was nearly in line with expectations, while continuing claims came in modestly below the consensus estimate. Overall, the report suggests that layoffs remain contained and there was no meaningful deterioration in the labor market during the week.Looking at the chart of jobless claims, the weekly data is nearly in the middle of what has been the trend. The figure has been flat since May.
The reaction in the markets is being impacted by the PPI which remains elevated and pointing more toward a hike by the Fed at the September meeting. The EURUSD is moving to new lows despite the ECB rate hike and is moving toward the 50% midpoint of the move down from the April high at 1.15857. An upward sloping trend line was broken at 1.1616 and that is close resistance now. THe 100 day MA at 1.1559 is a target on the downside now. That MA stalled the fall during last weeks trading.
For a new trader, the weekly jobless claims data provide a timely look at the health of the U.S. labor market.
Initial jobless claims measure how many people filed for unemployment benefits for the first time during the week. A lower number generally suggests that layoffs remain limited and the labor market is holding up. A higher number can signal that companies are beginning to reduce workers.
Continuing claims measure how many people remain on unemployment benefits after their initial filing. This number can be especially useful because a sustained increase may indicate that unemployed workers are taking longer to find new jobs.
From a market perspective, stronger-than-expected claims data—fewer claims—can support the USD and push yields higher because it gives the Federal Reserve less reason to cut rates. Weaker data—more claims—can pressure the USD and yields as traders price in a potentially softer economy and easier Fed policy.
Keep in mind that one weekly report can be volatile. Traders generally focus more on the trend, including the four-week average, than on a single week’s number.
This article was written by Greg Michalowski at investinglive.com.