US Initial Jobless Claims Preview: Resumption of employment, markets prices recovery

Initial Claims are expected to fall to 1.550 million from 1.877 million. while Continuing Claims are set to drop to 20 million from 21.487 million. Equity and currency markets are positioned for economic recovery, with US indexes near March levels and USD back to pre-pandemic levels in the major pairs, FXStreet’s analyst Joseph Trevisani reports.

Key quotes

“Initial Claims are forecast to decline to 1.55 million in the June 5 week from 1.877 million in the last week of May. This would be a 78% drop from their high in the March 27 release of 6.867 million, but it is seven-fold increase over the claims four week average just two weeks before of 232,500.

“Continuing Claims are predicted to drop to 20 million in the May 29 week from 21.487 the previous week. Here too that would represent a 20% improvement from the claims high of 24.912 million in the week of May 8 but it is an eleven-fold jump from the March 6 level of 1.702 million.”

“The decline in initial and continuing claims and the resumption of employment in May indicate that the reopening of the US economy, variable by state as it may be, is having a positive effect but there is a very long way to go. Without an acceleration of hiring it would take another seven months to fully replace the April payroll at the May hiring rate.” 

“Markets have largely priced in a recovery. Equities are close to their levels of early March with the Dow down just 4.68% on the year and from its record and the S&P off just 0.73% in the same measures at the Tuesday close. The Nasdaq treaded over 10,000 for the first time ever on Tuesday. Currencies have rescinded all of the US dollar’s risk-premium with the greenback weaker than late February levels in all major pairs except the sterling this week.”