In this week, one of indicator which has a high impact is “unemployment rate”. This indicator will influence US currency mover and bring an effect into economic condition in the coming week. If we look at the result from forexfactory, jobless claims fell into actual result about 409.000 figured out by labor department U.S, this was more than forecast about 421.000. Moreover, for two previous week has decreased gradually approximately 65.000 in may.
Some of factors that give impact to unemployment rate indicator can be vary. Labor market is the important thing that U.S must maintain because the effect of fluctuate unemployment rate will influence economic in the coming years. The most influence reason from falling of jobless claim is declining firings and gains in hiring, this are definitely helping sustain consumer spending, payrolls have climbed for seven consecutive months even though there have an increase costs of both food and fuel. High fuel costs are among reasons consumers are limiting purchases for people especially people who have no job.
Another reason is because of late school holiday in New York, a new emergency benefits program in Oregon and auto shutdowns caused by the disaster in Japan, the Labor Department has said. Flooding in the South hasn’t been a significant influence so far on the number of applications, the department official said today. However, no much special factors affecting and the median forecast was based on a survey of 49 economists but the continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.
While the U.S. economy is showing some signs of improvement, we expect the recovery will continue to be slow and uneven.” Job market conditions had “continued to improve time by time. Beside that, Federal Reserve Bank of Cleveland President Sandra Pianalto said in a May 11 speech in Cincinnati. “I expect it could take about five years for the unemployment rate to reach its longer-run sustainable rate of 5.5 to 6 percent
The question is what relation between unemployment rate with currency mover? Of course between both of them have a strong relation which Labor market condition is correlated with consumer spending, let see that if unemployment rate dropped, means that many people get job which will be able to earn money eventually right so this can lead people to spend their money for household need. As a result, consumer spending raise and help US currency become better toward other currency. That is why the trader should consider unemployment rate indicator because of having a high impact into currency before they “buy” or “Sell” it. All are logic and make sense.
Source: Bloomberg
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