The US dollar has seemed nigh on invincible for the better part of 2024 so far, with most currencies losing ground to the USD overall in the past six months. But will the trend continue?
Today, a wealth of data is coming out of the United States, which may prove very instrumental in determining the movement of the US dollar – and also the likelihood of rate cuts still in 2024 – later.
While these are less splashy and high-profile than releases such as Nonfarm Payrolls and interest rate decisions, many of them can provide crucial clues as to the state of the US economy (such as housing market health) and where the dollar is headed next.
Here, we’ll look at what information is coming out today, what it means and what the forecasts are for each – plus the likely effect such news will have on the dollar.
4 pieces of data coming out today:
- Initial jobless claims – to decline after surge?
- Continuing jobless claims – set to drop marginally
- Housing starts and buildings permits – slight improvement?
- Philadelphia Federal Reserve Manufacturing Index – manufacturing improving?
1. Initial jobless claims – to decline after surge?
United States’ initial jobless claims are a weekly statistic from the US Department of Labor that shows how many Americans filed, for the first time, for unemployment insurance. Hence, it’s a figure that describes how many people in the US are recently out of a job.
Because Initial Jobless Claims are released each week, it’s a more ‘real time’ way of taking the economy’s pulse than many other metrics, such as Nonfarm Payrolls.
Initial jobless claims that are declining, or are lower than anticipated, is considered a bullish indicator for the US dollar. Conversely, higher or higher-than-anticipated claims are more of a bearish indicator.
Last week’s initial jobless claims were higher than expected. According to the Department of Labor, in the week ending June 8, the advance 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 broadly expected the forecast to drop slightly from last week’s high levels. Broadly speaking, they anticipate a reading of 235,000 initial jobless claims, down 7000 from the previous week.
2. Continuing jobless claims – set to drop marginally
These are very similar to the above but, rather than specifically measuring first-time claimers, these are measures of those whose unemployment is ongoing.
And, just like with initial jobless claims, figures that are declining or lower-than-expected are better than those which are higher, as indicators for the US economy and US dollar.
Continuing jobless claims are also measured weekly, released every Thursday by the US Department of Labor.
Last week, continued jobless claims rose marginally from 1790,000 to 1820,000 for the week ending June 1.
This week, it’s anticipated that continuing jobless claims will decline from that high to a reading of 1810,000.
3. Housing starts and building permits – slight improvement?
Both housing starts and building permits preliminary data illustrate how much construction on new buildings has taken place in the past month.
This is significant, as a country’s housing market is often one of the first bellwethers to show signs of an impending recession – and analysts have been anticipating a late 2024 recession for America for months now.
The most recent building permits data from May 16th 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% below 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, housing starts in April were at a seasonally adjusted annual rate of 1,360,000. This was roughly 11% above the revised March estimate of 1,287,000, but approximately 12.3% below the April 2023 rate of 1,368,000.
Single‐family housing starts in April were at a rate of 1,031,000; approximately 9.5% below the revised March figure of 1,035,000.
This month, June’s building permits data is anticipated to be up marginally to 1,450,000. Housing starts, also, are expected to be up slightly at 1,370,000.
4. Philadelphia Fed Manufacturing Index – manufacturing improving?
Released monthly by the Federal Reserve Bank of Philadelphia, this index tracks the general output and productivity of manufacturers in the United States.
Rising scores show a bullishness for the US dollar, as it generally means that manufacturing business and business conditions are improving, while a declining score is usually a negative indicator for the dollar.
In May, the index declined 11 points to 4.5, mostly undoing an increase from April 2024.
More than 29% of the firms reported increases in general activity this month (down from 38% in April), while 25% of businesses reported decreases (up from 22% in April).
This month, analysts are expecting a rise in the score of 4.8, up marginally from 4.8 in May.
This would signal some improvement in manufacturing outlook and conditions – although a 0.3 rise would be not as dramatic a climb as the fall experienced in April 2024.
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