The Department of Labor released its weekly jobless claims data on Thursday, and to the surprise of many market participants, the number of claims declined below 400,000. Initial jobless claims dropped by 36,000 to 383,000 in the week ended Feb. 5, according to the Labor Department. It was the lowest reading since July 2008. The previous week's figures were revised to 419,000 from 415,000.
The four-week moving average of new claims, dropped 16,000 to 415,500 in the week ending Feb. 5.Analyst had expected that jobless claims would fall last week by just 4,000 to 411,000. The weather in the US has created an inconsistent data series which many economist have pointed to. Following a surge in the week ending Jan. 22, largely caused by unusual winter weather in some southern states, new claims have fallen sharply over the past two weeks.
The Labor Department reported that the number of continuing claims, those drawn by workers for more than a week, fell 47,000 to 3,888,000 in the week ended Jan. 29. Continuing claims are reported with a one-week lag. The unemployment rate for workers with unemployment insurance was 3.1% in the week ending Jan. 29, unchanged from the prior week.
The strength of the jobless claims data continues to put upward pressure on US yields specifically on longer term maturities. The 10-year note is currently trading with a yield near the 3.7% level. The upward pressure on yields is supporting the US dollar, specifically against the Yen.
The USD/JPY currency pair is starting to break out to the upside, moving above the 83 level for the first time in the past 2 weeks. Resistance is seen at 83.20 and then again at 83.65 and 84.50. Support on the currency pair is seen at 81.05.
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