Wild Optimism: U.S. Unemployment Claims

• By David Goodboy
• On 10:39 am EST, Wednesday November 4, 2009

David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.

The Event:

At 8:30 AM EST on Thursday, November 5th, the U.S. Department of Labor releases its weekly Unemployment Claims figure.

Description:

Employment levels are the main driver in any economy. Obviously, the greater number of the labor force working, the more spending/economic activity resulting in bullish conditions for the currency. This indicator is considered to be a lagging one, but labor conditions can be used to forecast future trends. If the figure is less than estimates, it's considered bullish for currency, greater than forecast is bearish.

Trader Take:

As expected the last release was worse than forecast. This week analysts are expecting an improvement to 523k. Once again, I believe this is wildly over optimistic. It's almost like the economists believe they can influence the figure via their forecasts and/or strings are being pulled behind the scenes. Facts are labor is in a dire situation in the USA and slight improvement may be all the country can hope for in this regard. The labor situation needs to stabilize first before we can hope for the predicted jumps in improvement. However, as always, be prepared for surprises!

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