The four -week advancing average of initial unemployed claims, which smoothes volatility, has risen by 4,000 to 216,750. This increase suggests a gradual increase in unemployed claims instead of an isolated peak, so that concern about the labor market can be mitigated.
Weak non-farming productivity contributes to economic care
At the same time, non-farming productivity for the fourth quarter amounted to 1.2%, missed the expected 1.5%and fell sharply compared to the revised figure of 2.3%of the previous quarter. Lower productivity growth can weigh on the profitability of companies and wage growth, so that economic expansion may be filled in. The combination of rising unemployed claims and weaker productivity can indicate a cooling market, which is a crucial factor for the interest rate decisions of the Federal Reserve.
Market implications: a weaker labor market could weigh on the US dollar
Higher unemployed claims are generally considered negative for the US dollar because they indicate weakening labor market conditions. If this trend continues, traders can start to praise in a more Dovish attitude of the Federal Reserve, which increases expectations for potential rate reductions. However, broader economic data, including upcoming employment reports and inflation figures, will be crucial in determining the following movements of the Central Bank.
Short-term forecast: Beararish for the US Dollar, Market looking at FED signals
The unexpected increase in unemployed claims, in combination with delaying productivity, could contribute to a Bearish in the short term prospects for the US dollar. Traders will closely monitor the future employment data and the comments of the Federal Reserve to assess whether the weakness of the labor market could accelerate the potential policy improvement. Further signs of deterioration of the labor market can exert extra pressure on the dollar and influence a broader market sentiment.