It doesn’t sound right, does it? Shouldn’t the U.S. dollar improve when U.S. weekly unemployment claims continue to improve overall?
Not necessarily. While last week’s claims were up, they’re still down overall from where they peaked the week of April 3.
This means that more job losses are happening more slowly. The unemployment rate will more than likely continue to rise at least 10 percent, but the pace of these job losses has started to peak and slow down.
As signs of hope emerge for the United States economy, it also improves signs of hope globally since the United States is one of the main growth engines for the world. Therefore, as things improve there, traders and investors alike are willing to venture into riskier areas of the world and thus into their currencies where they can get higher yields for their money.
The overall improvement in the U.S. weekly unemployment claims will continue to help U.S. stocks, foreign stocks, and even foreign currencies, but not the U.S. dollar.
Look for this theme to continue in the months ahead.
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