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US Jobless Data Score Another Home Run

Matt Eidinger April 11, 2019

Another week, another great data point for US weekly unemployment claims.

According to the Department of Labor (DOL), seasonally adjusted initial jobless claims fell to 196,000 during the week ending April 6th, representing the continuation of a four-week trend of decreasing filings.

This is modestly better than market expectations, which were set at 210,000. More importantly, this is the first time weekly claims have fallen beneath 200,000 since December 1969, when the US labor force was substantially smaller. The four-week moving average was also dragged down to 207,000 new claims.

The advance reading on continuing jobless claims came at 1,713,000 for the week ending March 20th, falling 13,000 from the prior week’s revised level of 1,726,000.

USD/CAD has been mostly range bound for the past two weeks and there was no indication of this ending this morning. Immediately after this morning’s data release, the greenback gained about 20 ticks against the loonie.

Likewise, the Dollar Index (DXY) moved up a modest 0.21% in the minutes after this morning’s labor data. Yesterday afternoon, the DXY slipped below 97 for the first time in nearly three weeks after the US Federal Reserve released the meeting minutes for its March 20th meeting.

This week’s top economic story has been dynamics at play between US President Trump and the Federal Reserve. Specifically, there has been a lot of attention spent evaluating the political inclinations of Trump’s recent nominations to the Federal Reserve – Herman Cain and Stephen Moore – and how they may be predisposed to guide the Fed towards monetary policy decisions that are more in line with the president’s political goals of lower interest rates.

Nevertheless, contrary to President Trump’s complaints about the equity market impact of rising borrowing costs, the Federal Reserve’s actions are fully justified based on underlying economic fundamentals.

Recent data, including today’s releases, clearly demonstrate the US economy is still firing on all cylinders and the labor market is the healthiest it has ever been.
It should be noted that according to data reported by the CME Group, markets are currently betting that Mr. Trump will be partly successful – that interest rates will be at least a quarter point lower by January 2020.

Bottom Line: Contrary to recent claims by President Trump, the US economy does not need more accommodative monetary policy and a new round of quantitative easing; in fact, it couldn’t be further from that. Economic fundamentals remain solid and the labor market is as healthy as it can be. Today’s economic data completely support the Fed’s stance in yesterday’s meeting minutes – a cautious, but flexible approach for monetary policy in 2019.

Matthew Eidinger
Fintech Specialist
Dealing Operations

 

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