Given the number of economic indicators and futures auctions associated with employment, it is easy to infer its importance to the market and the dollar. Thursdays economic calendar was nearly devoid of fundamental activity, but interest in tomorrows culminating NFP report added an additional angle in the usually overlooked jobless claims reports.
In terms of price action, the majors made little effort to break from ranges. The euro was stuck between 1.3330 and 1.3275 against the dollar as the pair consolidates not far from major resistance at 1.3360. In similar fashion, the Swiss franc-denominated pair was bouncing around its own 65-point range not far above big support seen at 1.1915. For the USDJPY, recent action took a dollar bias as the pair rose 45 points after putting in a swing low at 114.75. Finally, the dollar was able to move 100 points against the British pound before a previous low at 1.9620 held up as support.
In the home stretch for Fridays employment report, the currency market reverted to its usual consolidating pace as positions are quietly placed ahead of the event risk associated with NFPs. While the fundamental cupboards were rather bare this morning, the weekly jobless claims report fit perfectly into the employment speculation that has grown as end of the week nears. According to the recent statistics, 324,000 Americans in the week ending December 2nd filed for state benefits for the first time. This was slightly less than expected and far less than the previous periods 358,000 print. However, the previous months report has not been easily forgotten. Marking the highest number of first-time applications since October of 2005, initial claims through November 25th will affect the overall months labor report. Furthermore, though officials have cautioned that the weekly report was skewed by the Thanksgiving weekend, the trend higher suggests its is more than a mere holiday phenomena. Another reason to question the recent slip in initial claims is the momentum behind continuing claims. More aligned to the running unemployment rate, the number of people continuing to collect jobless benefits grew to a massive 2.524 million. At its highest since January, the indicator offers a more direct trend to follow as markets determine whether labor trends will support domestic spending in the worlds largest economy.
Though the claims report offers a convincing argument for disappointing NFPs tomorrow, it is only a drop in the bucket amongst other strong gauges. As the easily interpreted employment indicator has grown in stature within financial circles, the ranks of supplementary reports has grown. The ISMs manufacturing and service surveys have been distilled for their employment components. While factories reported they were trimming staff last month, the much larger service-based sector has accounted for a boost in its own levels. Elsewhere, the recent Challenger indicator confirmed a 22.7 percent drop in layoffs through November. However, what may be the most promising clue in for a better payrolls number was the better than expected 158,000 addition in ADPs November calculations. Tracking private employment trends, the print was better than expected and the best figure in five months. The market will relate the ADP and NFP numbers to see whether the two find a better correlation, which could lead to more precise estimates in the months ahead.
Equities were little changed by mid-session trade Thursday as macro-economics, M&A announcements and earnings reports escaped the market. From the benchmark indices, the NASDAQ Composite was leading volatility in a 0.33 percent drop to 2,437.82. The S&P 500 slipped 0.12 percent to 1,411.26 while the Dow edged 0.07 percent lower to 12,300.20. Though the market was little moved, newsworthy moves in individual stocks were not hard to find. Home Depot made headlines when announcing it had routinely back-dated options for 19 years. Shares of the building supplies retailer were off $0.64 or 1.6 percent at $39.28. Elsewhere, News Corp. announced it was close to buying back its an $11 billion stake in the company from Liberty Media Corp. News shares were trading 4.4 percent higher on a $0.95 climb to $22.69.
Treasuries, like the dollar, were little changed by todays weekly claims data. The ten-year treasury note was 1/32nd higher at 101-04 by 16:45 GMT while its yield was unchanged at 4.481. With the same lack of momentum, t-bonds were up 2/32nds at 98-15 and its yield held at 4.594.
