EUR/USD is trading at $1.3229, down 0.2%, on news that there has been a drop of 13,000 in the number of people claiming unemployment benefit in the US. Analysts were expecting the figure to remain unchanged. This also means that the number of claimants has fallen to the lowest level since October 2007. In addition, the US inflation rate climbed by 0.2% in July compared with June, in line with expectations. Some economists were worried that inflation might rise at a faster rate because of the quantitative easing (QE) programme, but this has not been the case.
The Fed has been stating for months that it will reduce its QE scheme when unemployment falls. The most recent report showed us that US unemployment is now at 7.4%, and today’s jobless claims figure is nearly at a six-year low. Consequently, dealers sold the euro and bought the US dollar, as they felt the Fed might taper its bond-buying scheme as early as next month. Today’s jobless claims report could be a sign of what is to come from the US.