The US dollar has looked almost invincible for much of 2024 so far, with most currencies losing ground against the dollar over the past six months. But will the trend continue?
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Today, a lot of data is coming out of the United States that could prove very crucial in determining the movement of the US dollar – and also the probability of rate cuts again in 2024 – at a later date.
While these are less flashy and high-profile than those related to nonfarm payrolls and interest rate decisions, many of them can provide crucial clues about the state of the U.S. economy (such as the health of the housing market) and the next direction of the dollar.
Here, we’ll look at what information will be released today, what it means and what the forecast is for each, as well as the likely effect such news will have on the dollar.
4 data coming out today:
- Initial jobless claims – will they fall after the surge?
- Requests for unemployment benefits continue, expected to decrease marginally
- New housing starts and building permits: slight improvement?
- Philadelphia Federal Reserve Manufacturing Index: Is Manufacturing Improving?
1. Initial jobless claims – will they decline after the surge?
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US Initial Jobless Claims is a weekly statistic from the US Department of Labor that shows how many Americans have applied for unemployment insurance for the first time. So, it is a figure that describes how many people in the United States have recently been out of work.
Because initial jobless claims are released each week, it is a more “real-time” way of gauging the pulse of the economy than many other metrics, such as nonfarm payrolls.
Falling, or lower than expected, initial jobless claims are considered a bullish indicator for the US dollar. Conversely, higher or higher-than-expected claims are more of a bearish indicator.
Initial jobless claims last week were higher than expected. According to the Department of Labor, for the week ending June 8, the anticipated figure for seasonally adjusted initial claims was 242,000, an increase of 13,000 from the previous week’s unrevised level of 229,000.
Meanwhile, the 4-week moving average was 227,000, an increase of 4,750 from the previous week’s unrevised average of 222,250.
This week, analysts generally expected forecasts to fall slightly from last week’s high levels. Overall, a reading of 235,000 initial unemployment claims is expected, down 7,000 from the previous week.
2. Claims for unemployment benefits continue – set to decline marginally
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These are very similar to the previous ones but, instead of specifically measuring first-time claimants, these are measures of those whose unemployment is ongoing.
And, just as with initial jobless claims, falling or lower-than-expected numbers are better than rising ones as indicators for the U.S. economy and the U.S. dollar.
Also measured weekly are unemployment claims, released every Thursday by the U.S. Department of Labor.
Last week, jobless claims increased marginally from 1,790,000 to 1,820,000 for the week ending 1 ° June.
This week, continuing jobless claims are expected to fall from that high level to 1,810,000.
3. Start of construction and building permits: slight improvement?
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Both preliminary data on construction starts and building permits illustrate how much new building construction has taken place over the past month.
This is significant, as a country’s housing market is often one of the first signs of an impending recession – and analysts have been anticipating a recession for America in late 2024 for months now.
The most recent building permit data from May 16 revealed that privately owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,440,000. This was 3% lower than the revised March rate of 1,485,000 and is 2% lower than the April 2023 rate of 1,470,000.
On the other hand, new construction projects in April recorded a seasonally adjusted annual rate of 1,360,000. This is about 11% above the revised March estimate of 1,287,000, but about 12.3% below the April 2023 rate of 1,368,000.
New construction of single-family homes in April recorded a pace of 1,031,000; about 9.5% below March’s revised figure of 1,035,000.
This month, June building permit data is expected to rise marginally to 1,450,000. Construction sites are also expected to increase slightly to 1,370,000.
4. Philadelphia Fed Manufacturing Index: Is Manufacturing Improving?
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Published monthly by the Federal Reserve Bank of Philadelphia, this index tracks overall production and manufacturer productivity in the United States.
Rising scores show a bullish attitude for the US dollar, as it typically means that manufacturing activities and business conditions are improving, while a declining score is usually a negative indicator for the dollar.
In May, the index fell 11 points to 4.5, largely reversing the April 2024 increase.
More than 29% of companies reported increases in overall activity this month (down from 38% in April), while 25% of companies reported decreases (up from 22% in April).
This month, analysts expect the score to rise to 4.8, up slightly from May’s 4.8.
This would signal some improvement in the outlook and conditions of the manufacturing sector, although a 0.3 increase would not be as dramatic an increase as the decline seen in April 2024.
This article was translated from English with the help of AI tools, and subsequently proofread by a local translator.
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