US Jobless Claims Disappoint, Rise to Just Below 400K
The hope that the US labor market is recovering and picking up steam got knee-capped by the latest round of jobless claims data. Claims rose to 399K from 375K the previous week, sharply higher than expectations.
Looking at the chart above it breaks the downward trend we had seen in the 4-week moving average and shows that despite the better economic data from the US in the past few months, it may not be sustainable.
US Retail Sales Show Consumers Starting to Retrench
In another key report, US retail sales disappointed forecasts as well, showing a very tepid 0.1% gain for December, continuing the slowdown in sales since a burst in September.
I had outlined the factors that are weighing on US consumers to start the week, and it seems that those factors are already impacting spending habits.
We also previewed the retail sales report here.
Core retail sales meanwhile dipped 0.2%, a big downward surprise compared to the 0.3% gain expected. Taking cars out of the equation, spending is already negative.
US “Recovery Momentum” Story Flounders
Taking these reports together – a weaker labor market and softer consumer spending – is a key indication that the recent narrative that the US economy’s recovery is gaining momentum is likely over. Instead the momentum may now be reversing and the idea that the US can “decouple” from the problems in Europe will probably be shelved as well.
The news can knock back some of the allure then of the USD when it comes to its advantage over other safe haven currencies, and we saw the greenback fall sharply against the yen and Swiss franc following the releases.
The US data also worked to weaken the commodity currencies – the Australian, New Zealand, and Canadian Dollars, which were weaker not only against the USD (normal risk-off play) but were sharply lower against the EUR which was boosted by ECB President Draghi’s press conference in which he imbued confidence that the measures taken by the ECB so far have been sufficient.
- Nick Nasad is the Chief Market Analyst at FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.
