USD Analysis: Initial Jobless Claims Better Than Expected

NEW YORK (Forex News Now) – The U.S. Department of Labor reported today that the number of Americans filing for initial unemployment benefits rose by 2,000 – less than expected for the week ending on November 13^th.

Previously, analysts expected a rise to 442,000, up 7,000 from the previous week’s two-year low of 435,000.  Instead, though, the figures came in at a seasonally-adjusted estimate of 439,000.

The number of continuing claims – people who have been on unemployment insurance for at least one week – also fell, coming in at 4.295 million, down by 48,000 from the previous week.

Both news reports were positive for currency market trading analysts, who expected higher reports to negatively impact the dollar. Instead, the dollar rose sharply against the yen, climbing 0.5% to 83.61, and helped pare losses against the euro incurred by previously disappointing news regarding a weak inflation report.

The four-week moving average for initial claims also fell by 4,000 from the previous week’s amount of 447,000.  The new moving average is at 443,000, with continuing claims falling by 45,500 to a new figure of 4.353 million. The moving average is a better indicator for unemployment prospects, since it smoothes out the volatility in the weekly reports.

Experts are looking to initial and continuing claims reports to provide some evidence that unemployment is slowing and hiring is starting to pick up.  While 2010 has largely witnessed dismal unemployment reports, the economy did add jobs in October for the first time since May.

It still remains to be seen, though, what kind of impact the Federal Reserve’s quantitative easing program will have on unemployment that remains stubbornly high, near 9.6%.

Bringing down unemployment has been a chief goal of the Federal Reserve, but largely has been unrealized in 2010 as the unemployment rate has only declined marginally, from 10.1% to its current figure. The hope is that the increased stimulus will be a boon for investors, although there is considerable debate regarding the effectiveness of QE2.

Still, the favorable unemployment report continues a string of good forex trading news regarding American employment, and gives hope that the unemployment rate will begin to fall once figures are in for 2010.

Investors are looking toward a slate of important economic reports due next week, particularly the U.S. GDP report on Tuesday and University of Michigan Consumer Confidence survey on Wednesday. Both are expected to rise, which could result in considerable upward pressure for the dollar.