Jobless claims are creeping up and may influence interest rate policy.

The latest US jobless claims data shows a slightly higher-than-expected 238,000 Americans filed for unemployment benefits in the week ending 15 June, indicating a potentially softening labour market. Although this figure is down from the previous week's total, the four-week moving average of claims remains elevated at 232,750, suggesting a labour market that's losing momentum.

Continuing claims also rose to 1,828,000, up 15,000 from the previous week and above estimates, further fueling concerns about the labour market's health. While some analysts believe this data indicates a moderating labour demand, others argue it's too early to make that call, attributing the rise in claims to seasonal factors like education workers filing for unemployment during the summer break.

However, if jobless claims continue to rise, it may prompt the Federal Reserve to reassess its interest rate cut timeline, as historically, the Fed has been sensitive to unemployment rates and jobless claims when making monetary policy decisions. Most Fed officials appear less concerned about the recent data, but a sustained increase in jobless claims could signal a softening labour market, potentially leading to earlier interest rate cuts. The labour market's trajectory remains a key factor in the Fed's decision-making process, and ongoing monitoring of jobless claims and other labour market indicators will be crucial in determining the direction of monetary policy in the coming months.

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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