Downbeat Jobless Claims Data; G20 Meeting Right Around the Corner

When the labor market is in trouble, the US economy is in trouble. Jobless claims rose 516k last week to the highest level since September 2001. The claims for unemployment benefits was only surpassed in the 2.5 weeks following 9/11.

Extrapolating the jobless claims data to non-farm payrolls and we could see non-farm payrolls top 300k before the end of the year. In September 2001, the last time jobless claims were at current levels, non-farm payrolls dropped 244k and in October of that same year, it hit that recession cycle’s low of -300k.

Retail sales also dropped 1.8 percent in September 2001, indicating that the deterioration in the labor market will cause a sharp contraction in consumer spending. Although the NBER has yet to admit the US economy is in a full blown recession, the jobless claims data is already beyond at recessionary levels.

The US dollar remains firm as the latest piece economic report from the US confirms the seismic challenges facing the US economy. The global markets did not receive Paulson’s changes to the TARP plan well and I continue to believe that in this troubling market environment, the US dollar and Japanese Yen will be the winners.

G20 Meeting Right Around the Corner

World leaders will be gathering in Washington tomorrow for an Emergency Economic Summit. Unfortunately I am skeptical of any groundbreaking announcements. Even though Gordon Brown, Prime Minister of the UK will want to push for reforms, President Bush may not want to commit Barack Obama, his successor, to any measures that he may not support.

And BTW, USD/CAD hit my 1.24 target today and EUR/GBP hit 0.8450

About Kathy Lien 236 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of DailyFX.com, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Investopedia.com Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for Tradingmarkets.com, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

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