Thursday, 5 Aug 2010

Dollar Falls on Unemployment Claims Data

The US dollar witnessed a steady depreciation against most of its major currency counterparts on Thursday after data showed U.S. initial jobless claims rose unexpectedly last week. The weekly report has had greater impact on trading in recent months because of investor concern that the U.S. economic recovery will be tepid and creates few new jobs to replace those lost during the recession. The USD is currently trading lower against the CHF by nearly 60 pips at 1.0473. It is also trading lower against the EUR and JPY.

More Americans unexpectedly filed claims for jobless benefits last week, a jump that may in part reflect difficulty in seasonally adjusting the data ahead of the Easter holiday. Initial jobless applications increased by 19,000 to 479,000 in the week ended July 31st.

Tomorrow's Non-Farm Employment Change release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the Dollar could go either way as a result. In any case, traders are unsure how the market will react to today's data. A weak report could feed risk aversion, boost Treasuries and actually aid the U.S Dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the Dollar. Or it could also encourage risk-taking and aid commodities and higher-yielding currencies at the Dollar's expense.