Market Looks Ahead On Employment Concerns (page 1 of 2)

US Dollar

Economic data was helpful to the dollar bull on the day as further suggestions of a May 10th rate hike were presented through a higher revised gross domestic product figure and lower initial jobless claims. Posting a 1.6 percent climb in the previous reading, the U.S. Commerce Department released revised and finalized output figures, to the tune of a 1.7 percent increase for the fourth quarter.

Subsequently, the price index rose 3.5 percent, slightly above the previous report. Relatively all good, the revision was widely expected with the report merely confirming the preliminary estimate leading to staid dollar sentiment. What did take center stage was the weekly initial jobless claims report as first time unemployment benefit claims declined by 10,000. Posting 302,000 for the week, the current reading dips below the four week moving average which currently stands at 310,750.

However, the current reading fed speculation of a lower than forecasted Nonfarm payrolls report being released next week. With the current four week average slightly higher when compared to the report preceding the February report, market sentiment looks to be concerned over an under 190K figure for the month of March.

Although trading is pricing in a 100 percent likelihood of another 25 basis point hike, lower employment figures would certainly jeopardize any subsequent hikes, leading to dollar weakness. Looking ahead, dollar pessimism may reverse as we head into the Asian session with plenty of greenback fodder ahead tomorrow.

Euro

Unemployment increased in the Euro region while consumer confidence ticked lower, even as the currency pair rocketed higher on the session. For the month of March, unemployment in the region's largest economy rose by 30,000 versus expectations of a 6,000 decline, forcing the overall rate higher to 11.4 percent.

Additionally, consumer confidence ticked lower in France as the survey moved lower for the month. Nonetheless, traders bid the Euro single currency higher on the session on mounting conviction that the European Central Bank will continue to raise interest rates in next week's meeting.

Citing inflationary pressures, policy makers should remain preemptive as price increases continue to hover the upper boundary of the central bank's target rate and growth prospects continue on healthy export activity. The remaining caveat seems to be the continued weakness in the domestic consumption arena. Should consumers continue to remain hesitant on the larger employment problems, future growth may be questionable, as so will higher rates.

British Pound

Nationwide housing prices contributed to the overall housing sector theme this week, bolstering earlier evidence of increasing mortgage approvals. Declining 0.2 percent on the monthly comparison, March's housing prices rose a full 1.1 percent in the month according to Nationwide building society. Subsequently, this boosts the annualized comparison higher by a 5.3 percent tick and fortifies sentiment of a founded residential property sector.

Coupled with recent climbs in industrial and manufacturing production, today's figures additionally lend to further speculation that the repurchase rate will not come under rate cut attack. With a rebound in housing demand, improvements in overall production and relatively higher inflation, central banker are now more than likely, if only incrementally, to keep the current 4.5 percent as the economy continues to expand.