According to the US Labor Department, first time claims for unemployment dropped by 29,000 to 343,000 in the week ending December 8th. This is the fourth drop in unemployment claims since the 439,000 surge back in November and is now the fewest since the beginning of October. Comparatively, the week’s better than expected figure drops below expectations of 368,000.
Overall positive, the report does spark some concern in regards to the US labor market. Claims for extended benefits rose in the week by 189,000 to 2.23 million. The figure is indicative of continued slack in the labor market as the number of people who have been forced to collect emergency unemployment or extended benefits increased.
Nonetheless, the jobless claims figure is being widely welcomed as positive news in conjunction with the US retail sales figure for November. US Commerce Department figures showed an increase in monthly retail sales as US consumers snapped up auto deals in the month. The gain led to a 0.3% uptick in November sales, reversing a 0.3% witnessed in October. However, stripping out the 4-year high in auto sales, core retail consumption was left unchanged for the month – not necessarily Dollar positive.
The mixed sales data will place emphasis on next month’s report, which should reflect higher spending on the holiday season.
Although mixed, the day’s releases can still be considered Dollar positive as it reinforces the fact that sectors of the economy are improving. The sentiment should power the US dollar in the short term.
But, with newly announced plans by the Federal Reserve in extending asset purchase plans yesterday, the greenback still remains mired in a longer term bearish bias. An extension of Treasury bond purchases will undoubtedly debase the greenback further, particularly against the EURUSD.
Technical Levels To Watch
The sentiment will place emphasis on the 1.3125 figure. Should the EURUSD break above the barrier, it would open scope for an immediate test of the 1.3200 psychological figure.