Initial Jobless Claims are data created and reported by the US Department of Labor as part of the weekly Unemployment Insurance Weekly Claims Report. unemployment insurance for the first time in the last week.
Initial Jobless Claims released by the United States Department of Labor on Thursday of each week, data is obtained from state unemployment agencies that report people who filed initial jobless claims with the Department of Labor’s Office of Unemployment Insurance. Work). Initial jobless claims are not the same as the number of people who actually receive unemployment benefits, because these initial jobless claims do not include people who submit advanced claims, besides that not everyone who submits initial jobless claims will actually receive benefits. unemployment.
Effect of Initial Jobless Claims
Initial jobless claims are the earliest US economic data released, this data that is released every week can be a market mover, from initial jobless claims data analysts can estimate macroeconomic conditions, when more people submit initial jobless claims, this means fewer jobs available in the labor market, and vice versa when fewer people submit initial jobless claims this means more jobs are available in the labor market, from this data information can be obtained about the current state of the economy.
The impact of initial jobless claims on the forex market varies from week to week, this is because initial jobless claims data are usually stable data, so this data is not ideal to be observed only in one week but at least in the last 4 weeks, so the effect of weekly initial jobless claims looks varied. every week but if you observe it in the last 4 weeks you will get a more stable impact. In general, initial jobless claims data that is higher than the forecast is considered bad and has a negative impact on the USD currency, while initial jobless claims data that is lower than the forecast is considered to have a good impact on the USD currency.
Initial Jobless Claims is a report of economic data in the United States that calculates the number of people who are unemployed. In the calculation process, the government does not carry out a process like picking up the ball which collects data from one house to another every day. The process can be said to be simple, namely that the government is just waiting for the arrival of unemployed people and wants to get some kind of benefit for the unemployed. So that the government program that provides benefits for the unemployed has several advantages:
1. Providing financial assistance to people affected by layoffs
Because the United States is a country with a super large economy, their government budget is also quite large. This is also one of the reasons for the emergence of a program of providing benefits to the unemployed so that they can survive while unemployed and can be used to learn additional skills so that one day they can finally get a new job. As long as the stomach is filled with food, the process of learning new skills and trying to apply for new jobs can be done better. So that the impact of the provision of these allowances can also ultimately give birth to people with better skills.
2. Simplify the calculation of the number of unemployed
Because every day people need to eat but for the unemployed they do not have money, so it is not surprising that they will immediately apply for unemployment benefits to the local government. From this process, the government is finally able to find out how many unemployed people are at one time. This will of course be reported to the central government so that an analysis can be made of whether the number of unemployed has decreased or increased from before. And finally action is taken to prevent worse things from happening, such as a recession or economic depression in various ways.
Effect of Initial Jobless Claims on the forex market
For economic analysts, Initial Jobless Claims data is one of the most important data to know. If it turns out that there is an increase in the number of unemployed, analysts and traders will soon find out and conduct deeper research whether the United States economy is heading for a recession or not. If it turns out that the recession conditions are starting to become clear, traders will wait for Initial Jobless Claims data the following week which will solidify their trading decisions.
If it turns out that in the following week the data shows an increase in the number of unemployed, there is a possibility that more investors will save themselves by taking most of their money away to other countries far from the threat of recession. The effect is that there will be many investors who exchange their money in US Dollars into other currencies. So that in the end the US Dollar will weaken against most other currencies, especially major pairs. And don’t be surprised if the GBPUSD, EURUSD pair makes a bullish trend and the USDJPY, USDCHF pair makes a bearish trend when Initial Jobless Claims data has periodically deteriorated.
If in other situations it shows a decrease in Jobless Initial Claims, which means that there is a reduction in the number of unemployed, it will result in an increase in investors’ confidence to invest in the United States, whether in the form of manufacturing investment to stock investment to bonds. This will allow traders and investors from all over the world to exchange their local currency while bringing capital to the United States which in itself makes the demand for the US Dollar increase. And according to the theory of supply and demand, things like this will trigger an increase in the price of the US Dollar. So don’t be surprised if when the value of Jobless Initial Claims decreases periodically it will make pairs like GBPUSD, EURUSD form a bearish trend and make pairs like USDJPY, USDCHF form a bullish trend.
Conclusion:
According to the explanation, it can be said that there is a kind of negative correlation between Jobless Initial Claims data and the USD price. However, this correlation will be even more negative when Jobless Initial Claims data manages to form a clear downward or increasing trend. If the Jobless Initial Claims data does not form a clear downward or increasing trend, the USD price will also not necessarily form a negative correlation.
