No Holiday Cheer for the Dollar

Wednesday's U.S. economic news, which comes ahead of a week full of important economic data points, affirms the soft-landing scenario and puts another feather in the rate-cut cap.

Initial jobless claims, like the dollar, are also fraying the edges of their range. The jobless claims, which have presented a more accurate depiction of labor-market trends than the Bureau of Labor Statistics' non-farm payrolls report, rose 12,000 to 321,000 for the week ended Nov. 18. The move brings the four-week moving average to 317,000, the top end of its range for 24 weeks, according to Briefing.com.

For those investors and forecasters expecting a rate cut, the rise in jobless claims was the golden ticket. Goldman Sachs economist Jan Hatzius acknowledges in a note Wednesday that his call for Fed rate cut next spring is a minority view. But a rise in unemployment signaled by a rise in jobless claims or a drop in payrolls to below 100,000 new jobs per months are just the red flags he's looking for.

Hatzius must be secretly celebrating the dollar's response to the jobless claims data Wednesday. The report comes on the heels of rumors swirling through the currency markets that the October payrolls report will be revised downward from 92,000 and unemployment revised upward, from 4.4% to 4.6%, says Ashraf Laidi, chief foreign exchange analyst at CMC Markets U.S.