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Dollar Rises as Weekly Jobless Claims Show Recovering Labor Sector

Stephen Casey October 5, 2017

For the fourth time in five weeks, US weekly jobless claims are on the decline as this morning it was reported 260k Americans filed first time unemployment claims during the week ending September 29. The numbers over the last month have been affected by the hurricanes’ lingering devastation through Texas, Florida, Louisiana and Puerto Rico. It could take some time before these labor sector numbers settle. The market now turns to Friday’s US non-farm payrolls report.

The big dollar is experiencing a small bounce following this morning’s releases. In addition to weekly jobless claims, it was also reported that the trade deficit in the United States narrowed to $42.4 billion from a revised $43.6 billion last month. Exports grew 0.4%, hitting the highest level since early 2015.

Also released this morning were the much-awaited ECB minutes. The euro has slumped a few points in the house following this release, as the committee repeated their previous stance that any reassessment over monetary policy would be “gradual and cautious.”

ECB officials appear to be so concerned about recent volatility in the foreign exchange market – specifically the euro’s rise this year – that some spirited debate too place at last month’s meeting. European policymakers meet again on October 26.

There is also a number of Fed speakers on the docket this Thursday. The Fed’s Powell, Williams, Harker and George will all be speaking at various conferences – one day following Fed Chairperson Janet Yellen, who spoke Wednesday in St. Louis. Her speech on banking regulations made no reference to current economic conditions or the Fed’s stance on monetary policy.

Bottom Line: It’s been a quiet start to the fourth quarter as the shocking events in Las Vegas on Sunday may have taken some wind out of the market’s sails. The big dollar’s recent recovery has hit a snag but this week’s positive data releases continue to support another Fed interest rate increase before the end of the year. Expectations for Friday’s non-farm payrolls report are on the low side (+100k) as the impact of Hurricanes Harvey, Irma and Maria continue to impact the labor sector. Weekly jobless claims have been received well and continue to slide lower toward historic lows.

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