US employment recovery maintains a high pace, spooking markets

The US labour market continues to gain strength, as confirmed by new weekly jobless claims data.

Initial claims fell by 29K to 348K last week, and the number of repeat claims fell by 79K to 2.82M in the week to August 7th.

Both indicators have intensified their decline over the past two months, and so far, it is difficult to see signs that the delta strain has subsided. Previous support programmes for the unemployed are running out, and savings are depleting, prompting an intensified job search. In addition, the holiday season is coming to an end, and the school year is approaching.

This good news for the USA has only added to the wave of risk aversion today, pushing European indices down to 2% and taking 1% from the Nasdaq by the start of the regular session in New York, adding to fears of an approaching QE tapering.

The looming reduction in asset purchases on the Fed’s balance sheet is good news for the dollar. Still, apart from the short-term volatility risks in the coming days, this policy reversal is not bad news for equities.

The FxPro Analyst Team