Just When You Thought Initial Claims Couldn’t be Any Worse….
The US Initial Claims figure for the Week ending March 28th rose to 6,648,000 vs an estimate of 3,500,000 and the previous weeks revised figure of 3,680,000! Does it even matter what the actual number is? Once you reach a certain point, whether it is 3,000,000 or 6,000,000, the number is BAD!! This data is truly insane to think about. That is roughly 10,000,000 people filing for US initial unemployment claims over the last 2 weeks!
Source: Tradingeconomics.com, USDOL
As we discussed earlier in the initial claims preview, as the United States goes under lockdown, state by state, these numbers are likely to continue to remain high. Some states, such as Florida, are just implementing lockdowns, therefore many people in these states have not yet filed for unemployment benefits. This should keep the figures high over the next few weeks. Most of those filing for claims have been in the food and service industries. As restaurants, bars, and nightclubs are forced to temporarily close and workers need to remain at home, there is no other choice for them but to file for unemployment!
Interestingly, last when after the data was released, the US Dollar Index (DXY) moved lower 1.5% on the day. However today, after moving higher during this week, the DXY is continuing higher! The DXY has broken higher through the psychological resistance level at 100.00, and well as, the horizontal resistance and the 38.2% Fibonacci retracement from the March 20th highs to the March 27th lows to 100.25. The next resistance level is the 50% retracement level at 100.62. If the US Dollar reverses and moves lower, support now comes in between 99.90 and 100.06. (If this occurs, it would set up a shooting star candlestick formation on a daily timeframe, which would indicate a possible move lower).
Source: Tradingview, City Index
Tomorrow, NonFarm Payroll data will be released. The expectation is for -100,000 jobs. The unemployment rate is expected to uptick from 3.5% to 3.8%. However, this data may not have its usual impact, as it is too far backward looking. Most people will continue to focus on the initial claims data to see how the coronavirus is currently affecting employment, as it is the timeliest of the employment data.