The number of Americans requesting new unemployment benefits surprisingly decreased last week, according to data, raising hopes that the Federal Reserve may continue raising interest rates if the economy remains robust. As a result, the dollar rose against a basket of currencies on Thursday. The Labor Department reported that initial claims for state unemployment benefits …
The number of Americans requesting new unemployment benefits surprisingly decreased last week, according to data, raising hopes that the Federal Reserve may continue raising interest rates if the economy remains robust. As a result, the dollar rose against a basket of currencies on Thursday. The Labor Department reported that initial claims for state unemployment benefits decreased by 9,000 to a seasonally adjusted 228,000 for the week ending July 15. Economists polled by Reuters had forecast 242,000 claims for the latest week. Following the data, there was a slight increase in the likelihood that the U.S. central bank will hike rates after a widely anticipated 25-basis-point increase next week. Fed funds futures traders are pricing in an additional 34 basis points of tightening, up from expectations of another 32 basis points of increases on Wednesday. Adam Button, chief currency analyst at ForexLive in Toronto, said: “The market has been looking for signs of layoffs in the U.S. and they simply aren’t materializing.” The initial unemployment claims statistic for today confirms once more how strong the labor market is in the United States and how much work still has to be done by the Fed.
Other statistics released on Thursday revealed that the number of existing homes sold in the United States fell to a five-month low in June as a result of an ongoing housing supply crunch that reduced the rate at which home prices were falling annually. Investors will be looking for any new information on whether the Federal Reserve will likely hike rates again in September in the comments made by Fed Chair Jerome Powell following the central bank’s interest rate decision on Wednesday. The dollar had fallen after last week’s announcements on producer and consumer inflation showed signs of softening, suggesting that the Fed’s 2% inflation target may be getting closer. The dollar index increased by 0.62% to reach 100.85 in relation to a basket of currencies.
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