Trade Desk Thoughts - Unemployment Claims

Unemployment Claims (Weekly) Actual 425k, Expected 427k, Previous 432k

Release Explanation: The number of workers filing new claims for unemployment benefits. 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. 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. This report also provides the number of weekly continuing claims as well as 4 week moving averages of new and continuing claims, which most economists prefer to use.

Trade Desk Thoughts: The number of new claims decreased 10,000 from last week. The 4-week moving average of new claims was 440,250, a decrease of 6,000 from the previous week's revised average of 446,250. The number of people claiming benefits during the week ending Aug. 16 was 3,423,000, an increase of 64,000 from the preceding week's revised level of 3,359,000. The 4-week moving average was 3,365,500, an increase of 36,250 from the preceding week's revised average of 3,329,250.

"While the number of new claims remained high, they have declined for a third week in a row," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "However, the 4-week average of continuing claims jumped strongly, which points to continued weakness in the sector."

Forex Technical Reaction: The two reports taken together have left curreny valuations with little movement. The latest information on Gustav is that it is strengthening and is expected to re-gain hurricane status as it enters the Gulf of Mexico.

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