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Slight Increase in Jobless Claims Drags Dollar Higher

Stephen Casey November 9, 2017

The number of Americans filing for unemployment benefits increased last week to 239,000. The number represents a rise of 10,000, but the Labor Department noted that it was finally processing backlogged hurricane-related claims – meaning that this should do little to impact foreign exchange markets today. It’s been a very quiet week for economic data – and with little but Fed-speak planned before the weekend, broader themes are likely to guide currencies for the next few days.

For traders, today’s jobless figure should confirm that economic data continues to normalize following hurricane-related disruptions in September. In the immediate aftermath of hurricanes that hit Texas, Florida and Puerto Rico, unemployment claims hit a three-year high of 298,000.

Although the greenback has experienced a brief respite, the big dollar is only climbing off the lows of the session. Any lingering optimism concerning Trump’s tax plan has evaporated after Treasury Secretary Steven Mnuchin said that he would not rule out a delay in the corporate tax cut. Meanwhile, Senate Republicans seem to be pulling away from their colleagues in the House on many of the big items from the reform bill. With the extended holiday break just around the corner, this bears watching – and could continue to hit the greenback.

Overnight, stocks turned red, despite a report from the European Commission, which showed that growth forecasts have improved. Equities in Asia briefly rose overnight, before a sharp turnaround led most indices to finish lower on the session. Japan’s Nikkei 225 fell 0.2%, which pushed the yen up by 0.4% to its best level of the week.

Bottom Line: As Frank Drebin once said, “Nothing to see here! Please disperse! Thank you.” There really is nothing to see here this morning, with U.S. economic data continues to normalize. The U.S. dollar index failed to take out the October high of 95.15 earlier this week and has weighed down the greenback amid a void of solid data points. Ahead of a long holiday weekend in the U.S., November consumer confidence rounds out what has been a tame few days. Good luck.

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