Stay Connected

Our News Centre and Blog is your link to a dynamic network of information, people, and ideas curated by our FX and payments experts.

Market Wire
US Jobless Claims Take Two Steps Back as Stimulus Talks Collapse

Matt Eidinger October 15, 2020

The US labor market hiccupped last week – reinforcing claims of a stalled recovery from the economic fallout due to the COVID-19 pandemic amid rising case counts across the United States.

The US dollar barely budged as the data was released. In the minutes after 8:30 am, the greenback was largely unchanged against both the euro and the Canadian dollar. In contrast, on a trade-weighted basis, the US dollar rose 0.5% overnight due to comments from US Speaker of the House Nancy Pelosi and Treasury Secretary Mnuchin confirming a stall on stimulus talks.

According to the report from the Department of Labor, 898,000 Americans filed for unemployment insurance during the week ending October 10 – a rise of 53,000 from last week’s revised figures. This marks the 7th week in a row where claims have hovered in the 800,000 range and reinforces the idea of a fragile labor market ahead of the 2020 election.

Continuing jobless claims, which are reported with a one-week lag, scored a big win – edging lower to just a hair above 10 million for the week ending October 3.

Separately, the Federal Reserve Bank of Philadelphia reported an expansion of regional manufacturing activity this month according to the diffusion index, which rose to 32.3 – more than double both the figure near 14 markets were expecting and the September reading of 15.

Managers surveyed reported optimism regarding prospects for future growth in the next six months in general activity, new orders and employment. Although the current value of the employment index fell three points to 12.7, it remains firmly in positive territory. Similarly, those surveyed reported capacity utilization rates 10% lower than this time last year but expect increased capital spending in the next 12 months.

As politicians and the public shift focus towards the November 3 election, today’s economic data underpins the enduring challenges that millions of Americans continue to face in a fragile labor market. However, after more than a week of flip flopping, Congressional leadership and the White House remain at a standstill regarding the approval of additional stimulus measures for the American people.

Recently, Fed Vice-Chairman Richard Clarida remarked that the economic shock from coronavirus “may go into the record books as the briefest recession in history.” Whether Congress and the executive branch can come together and enact additional fiscal stimulus measures in the coming weeks and months could very well determine if the recovery is as quick.

Matthew Eidinger
Market Strategist & Fintech Specialist