Jobless Claims

Jobless claims are a weekly statistic reported in the United States that represents a key barometer for domestic employment.

As one of the most closely watched US indicators, jobless claims carry a lot of weight in financial markets, namely forex and the stock market.

Jobless claims are reported on a weekly basis by the Department of Labor. While painting a picture of the overall health of the economy, jobless claims can be broken down into two types.

This includes initial jobless claims or persons filing for unemployment for the first time.

Additionally, this also entails continuing jobless claims, indicating unemployed people who have been receiving unemployment benefits previously.

Why Jobless Claims Data Matters in Forex

Jobless claims can give an important snapshot of the US economy, which has impactful consequences on the US dollar.

During times of economic stress, a surge in jobless claims is likely to signal the US economy is performing badly. This was on full display in early 2020 due to the outbreak of Covid-19.

Such scenarios reduce risk appetite by investors who traditionally look to the US economy for broader signals.

History is full of examples of both expanding and contracting labor markets.

By extension, reduced jobless claims traditionally is seen as a strength that can power recoveries or rallies in US markets.

It should be noted that initial jobless claims and continuing jobless claims often do not yield the same market impact.

This is due to the fact that initial jobless claims measure emerging unemployment, which are released one week before continuing jobless claims.

As such, the initial claims typically have a higher impact on the markets.