The US dollar strengthened against most of its major counterpart after the report showed today that the number of unemployment claims in the US dropped significantly last week, despite Federal Reserve Chairman Ben Bernanke’ prediction of higher unemployment.
Bernanke said in his testimony yesterday:
Notable declines in the unemployment rate in December and January, together with improvement in indicators of job openings and firms’ hiring plans, do provide some grounds for optimism on the employment front. Even so, with output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.
These words suggest that the unemployment may remain at high levels for a prolonged period, but today’s report about the claims for unemployment benefits didn’t support this outlook. The number of jobless claims in the US dropped from 419,000 to 383,000 last week. The market participant expected less sharp decline to 411,000.
The report about the Treasury budget was also positive, showing the decrease of the deficit from $78.1 billion to $49.8 billion in January. The analysts predicted the drop to $69.5.
EUR/USD tumbled from 1.3731 to 1.3592 as of 23:17 GMT today. At the same time, USD/JPY surged from 82.35 to 83.36 and USD/CHF climbed from 0.9576 to 0.9690.
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