Dollar Follows Stock Market Higher

The Dollar followed the US stock market higher this week as the Dow made all time highs then paused in front of Friday’s unemployment report.  As the Dollar moved higher from all time lows in the Euro and other currencies the move was probably more of a correction than any sort of turn around.

Since making all time highs the stock market has paused for most of this week as it is waiting for the September unemployment report which will be released tomorrow morning. Economic data released this morning indicates that the data may be on the soft side.

The number of newly laid off workers filing claims for unemployment benefits shot up last week by the biggest amount in four months.

This morning the Labor Department reported a total of 317,000 applications for unemployment benefits last week, an increase of 16,000 from the previous week. It was the biggest gain since jobless claims rose 18,000 during the week of May 9.

The rise was bigger than analysts had expected and could be a further sign that the labor market is slowing under the impact of the worst slump in housing in 16 years and a severe credit crunch that roiled global markets in August.

The stock market may rally on a distressing unemployment report as Fed watchers would guess that the Federal Reserve would continue to lower interest rates in the face of a slowing economy. However, lower rates are not favorable to dollar strength so the long term Dollar downtrend would likely immediately kick in given a less than expected unemployment report.

At this time analysts believe the unemployment rate rose in September to 4.7 percent, up from 4.6 percent in August. They are expecting that in spite of this businesses added 100,000 jobs to their payrolls

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!