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US Initial Jobless Claims Preview: Can they help the dollar?

  • Claims expected to slip to 765,000 from 793,000.
  • Continuing claims forecast to a pandemic low 4.413 million.
  • Retail Sales surprise seconds credit market based dollar strength.

The Retail Sales January roman candle is clear evidence that the US consumer will spend free money. But the long-term health of the US economy depends on employment and here the prospects are far more equivocal.

Initial Jobless Claims are expected to continue their slow descent in the February 12 week, slipping to 765,000 from 793,000. Continuing Claims, which chronicle the total number of people receiving payments from this combined federal and state program, is forecast to fall to 4.413 million, the lowest of the pandemic era, from 4.545 million.

Initial Jobless Claims

FXStreet

Since the explosion of jobless claims late last March heralded the economic catastrophe brought on by the pandemic lockdowns, more people have requested benefits every week than at any time in past US history.

Claims and NFP

The end of California's lockdown in January and the loosening of restrictions elsewhere, has reversed the increase in claims which drove the four-week moving average from 740,500 in November to 837,500 in December and 856,500 in January. After claims peaked at 926,000 in the first week of January they have fallen 14% in a month. The pandemic low remains 711,000 in the week of November 6. 

Rising claims foretold the payroll loss in December of 227,000 positions and January's weak addition of 49,000 workers.

Conclusion

Retail Sales may have primed the markets for better US economic news.

Treasury yields have climbed sharply in the last two week, with the 10-year bond reaching 1.3% on Tuesday its highest since before the Federal Reserve intervention in early March. Rising rates have in turn given the dollar a decided January edge.

If jobless claims can improve on forecasts, markets will add them to the suddenly buoyant US economic picture.

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Author

Joseph Trevisani

Joseph Trevisani began his thirty-year career in the financial markets at Credit Suisse in New York and Singapore where he worked for 12 years as an interbank currency trader and trading desk manager.

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