Jobs Report Puts Dollar's Monthly and Quarterly Gains to Test

What Do Jobless Claims Mean to the U.S. Economy?
  • U.S. currency drops after posting gains last month, quarter
  • Citigroup sees slowing employment rise, greenback weakness

The strength of the dollar is being put to the test.

The U.S. currency weakened following gains last month and the previous quarter as investors prepare for Friday’s September employment report. Anemic demand from China meant fewer factory orders in the U.S. in September, causing the Institute for Supply Management’s factory index to fall its lowest level since May 2013. 

Citing seasonality and a broad slowdown in economy activity, Citigroup Inc. said employers only added 180,000 jobs in September, potentially reducing scope for the Federal Reserve to raise interest rates.

"It looks like the market is just waiting to get a bad number that will confirm the Fed’s dovishness," Steven Englander, global head of Group-of-10 foreign exchange strategy at Citigroup, said by telephone. "If it’s a strong number, you break even in dollar terms, and, if it’s a weak number, the dollar will sell off."

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.1 percent to 1,212.41 at 5 p.m. in New York. The index gained 0.6 percent in September and 2.8 percent during the third quarter.

Noisy Reports

The number of Americans filing applications for unemployment benefits rose last week even as the number of people continuing to receive jobless benefits dropped to 2.19 million in the week ended Sept. 19, the fewest since November 2000, a Labor Department Report showed. The median forecast of 96 economists surveyed by Bloomberg shows employers added 201,000 jobs in September.

"Jobless claims numbers are important, but they can be a bit noisy week to week," said Mark McCormick, a strategist in New York at Credit Agricole SA, which is forecasting a 195,000 gain in payrolls. "If numbers come in line with our forecast, and pretty much consistent with the 200,000 print trend, that should be supportive of the dollar."

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