American Unemployment Claims unexpectedly jumped for a second week in a row, putting a big warning sign on American recovery. Back to the days of risk aversion?
Jobless claims jumped from 460K to 484K. A drop to 439K was predicted, so this is a big disappointment. But this may not be necessarily bad for the dollar, especially against the Euro:
Unemployment Claims proved to be the best indicator for the all-important Non-Farm Payrolls release. The improvement during March – from 496K to around 440K was well reflected in the recent NFP, that showed a big gain jobs. So
Also last week, jobless claims rose from 439K to 460K. This disappointment was taken with caution, as it could be a one time rise related to Easter. This time, it could already be a trend.
Will the US dollar weaken?
The instant victim of this release was USD/JPY – it fell right after the publication. The yen gained on dollar weakness, but also on risk aversive trading – the yen is also a safe haven currency, enjoying fear and suffering from hopes of global recovery.
The other currencies reacted with caution – they hardly moved, or even dropped against the dollar. At the time of writing, EUR/USD is trading at 1.3538, slightly lower.
A return to global fears could bring back the risk factor through the front door. This means that good American figures cause dollar weakness on fear, and bad American figures, like this one, can send the dollar up. The risk factor never really went away, but it has been in the sidelines since December.
This second rise in jobless claims joins new fears around the Greek bailout program. German professors went to the high court to challenge the government’s decision to support Greece. It’s never over…
We have 3 more releases of unemployment claims before the next NFP on May 7th, but this trend isn’t good.
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