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Forex Flash: Rising specter of unemployment haunts US – UBS

By FXstreet.com,  January 03, 2013, 07:02:00 AM EDT

FXstreet.com (Barcelona) - A 6.5% unemployment rate in the US may now be engrained in the market's collective conscience in factoring in policy settings, but the Fed itself noted that the headline rate is not the be all and end all for normalization. Bernanke's post-meeting statement in December opened with a warning against the high underemployment rate (U6), which will certainly be a factor in upcoming decisions.

How to take the U6 into account will become clearer in time, though recent data clearly shows that on an absolute and relative (to headline rate) basis historically, the U6 remains stubbornly high compared to comparable levels of headline unemployment. "The rate's prominence can only rise up ahead, and given the new importance of levels of macro figures, markets will need to devise a corresponding reaction function." warns Research Analyst Gareth Berry at UBS.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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