US Initial Jobless Claims Preview: Markets to watch for signs of labor trouble

US Unemployment Claims are set to remain around 700,000, indicating stabilization after a gradual decline, but business closures and restrictions could generate a second wave of layoffs. The dollar could attract safe-haven trade if claims rise substantially, Joseph Trevisani, an Analyst at FXStreet, informs.

Key quotes

“Initial Jobless Claims are forecast to be essentially unchanged at 707,000 in the week of November 13 following 709,000 previous. Continuing Claims are expected to drop to 6.47 million in the November 6 week from 6.76 million. Both predictions would be the lowest of the pandemic era.”

“Even with the COVID-19 vaccines on the horizon, there is time for the current recovery to grind to a halt if the closures become extensive or last long enough to again cripple consumer spending. Up to this point no US governor has ordered business operations restricted to essential services. Most measures involve rolling back reopenings, limiting social gatherings, advice against travel and curfews for bars and restaurants.”

“Currency markets have not expressed an opinion on this wave of the pandemic. The dollar has been largely contained in its ranges of the past four months against the euro while the yen and the Canadian dollar have continued their slow gains. The situation, however, is fragile. If claims unexpectedly rise will the safety-trade to the dollar resume? For the moment it seems unlikely as the surging caseload in Europe, several weeks ahead of the states, Japan and elsewhere has had no impact and the increase in the US was predictable and inevitable. Yet the US is the home of the dollar as well as the largest economy.”

“The world and the US could again be in for several very unpleasant months, or not. No one really knows. In the US the bad news will surface in unemployment claims first.”




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