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: Initial claims for unemployment benefits had thier largest drop in 16 years last week.
Initial claims for jobless benefits fell by 94,000 (-16%) to a seasonally adjusted 492,000 in the week ended Dec. 27 from an unrevised 586,000 the week before. The four-week average of new claims fell by 5,750 to 552,250 from 558,000.
The unemployment rate for workers with unemployment insurance rose to 3.4% from 3.3%. The number of workers continuing to claim benefits surged by 140,000 to 4,506,000, the highest level since December 1982. The highest number of continuing claims was 4,713,000 set back in November of 1982.
"The weekly number was likely skewed by the Christmas holiday,' said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "The rise in continuing claims indicates that workers are finding it much more difficult to find work. Employment is still expected to weaken going forward."
Forex Technical Reaction: The dollar has recently made a big move against the euro, but has fallen sharply against the pound as the Rusiian Rouble plunged. S&P futures held steady with a 2.75% gain on the day and the dollar moved higher against the yen.