Initial Jobless claims printed better than expected at 400K versus 404K expected. The kicker is that last week's 398K was revised upward to 401K, meaning that the unbroken streak of 400K+ readings is now at 18 weeks. Applications for jobless benefits fell by 1,000 to 400K, the fewest in almost four months. The four-week average also declined to the lowest level since April.
A further reduction in the pace of new jobless claims may be needed before companies regain the confidence to step up hiring, which has slowed in the past three months. Claims are moving in the right direction however, a sign that things aren't getting worse in the labor market. The rate of job creation needs to pick but before people start to feel more comfortable about the economic outlook.
The Euro slipped today on dovish comments from ECB President Trichet after the European Central Bank left the interest rate unchanged at 1.5% as widely expected. Trichet said in the press conference after the rate announcement that the central bank's bond-buying program is ongoing and policy makers will conduct special liquidity operations to provide relief to the regional financial crisis. He added that the decision on the bond-buying program was not unanimous.
USD/JPY plunged from 79.80 to 79.05 in the hour following the dismal new claims release. A faltering U.S. economic recovery will continue to put downward pressure on the pair as it could slide though the key 79.00 level. The Euro also fell as traders kept USD well bid.