The weekly jobless claims report on Thursday was better than expected. However, analysts note that the marked decline in initial claims has been exaggerated due to a change in methodology and is not a sign that the labor market recovery is gaining momentum.
The level of new and ongoing requirements remains high, signaling that the labor market continues to experience significant disruption.
However, the modest downward trend in applications over the past few weeks is one sign that the recovery in the labor market is at least not reversed and that employers have continued to add jobs in August. However, the momentum appears to be weakening, indicating less growth than the gain of 1.76 million last month.
The rebound of the dollar continues at the beginning of the American session as a positive response to data on jobless claims, which turned out to be better than expected. The Swiss franc is currently the second strongest, followed by the Euro, and both are rising against the weaker pound sterling. Commodity currencies are following the weakest as gold and oil soften. The Yen turned mixed as the rise in European stocks could be offset by a pullback in US markets.
The number of initial claims for unemployment benefits in the United States for the week ended August 29 fell by -130,000 to 881,000, which is below expectations of 965,000. The four-week moving average of initial claims fell by -77.5k to 991.8k. In the week ending August 22, the number of ongoing claims fell from -1238k to 13254k.
Exports of goods and services in July increased by 8.1% mom to $168.1 billion. Imports grew by 10.9% mom to $ 231.7 billion. The trade deficit widened by 18.9% MoM to -63.6 billion US dollars, which is higher than the expected -52.2 billion US dollars.
Technically, we still believe that a break of 1.1762 support for EUR/USD and 0.9161 resistance for USD/CHF is needed to indicate that the dollar is experiencing a steady bounce shortly.
The Swiss franc can be tricky as it rebounds strongly against other major European currencies.
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