Fundamental Tensions for the Dollar

• A jobless claim streak of this magnitude has not existed since 1973


• Harsh Times for the Philly Feds Index

Manufacturing activities as shown in the Philadelphia Feds Index shrank further this July, displaying a looming hardship in the sector.

Another declining quantity happens to be the Philadelphia Federal Reserve Index of Business conditions which fell to a value of -2.9 this month from a much higher 4.7 in June. This shows a consecutive 9 months of sliding activity in the last 11 months and the most sluggish pace for the decline so far.

A reading above 0.0 usually signifies better conditions, but readings below show worsening conditions. After the report was released, the dollar index fell under 97 and subsequently making its way 0.31% lower to 96.87.

Many analyst expected the index to slip in July but thought it would still maintain a positive value.

The New York Fed, also called the Empire State Index generated a similar report as it totalled 0.6 in July.

In reverse to what might be perceived from the Philly Fed Index, other surveys might reflect an expanding sector, as analysts suggest that any number below zero means that companies are expanding instead of contracting.

Other details within the Philly Feds report appear to be calming as the index for shipments rose to 6.3 in July from a negative 2.1, and the new orders index rose to 11.8 this month from a negative 3 in the previous month.

With many of the manufacturers in Philadelphia expecting business to be better 6 months from now, the index for future general activity has grown 4 points to 33.7.

This regional report on manufacturing is important to traders as it foretells the National Institute of Supply Management (the ISM) factory survey report which will be released in 2 weeks.

The ISM which previously came in higher in June at 53.2 from a previous 51.3 in May, has shown its swiftest growth in 15 months.

Despite the number of people recorded to have applied for unemployment benefits last month declining by 1000 to 253,000. The value although over estimated at 265,000, appears indifferent as it displays no sign of rising layoffs.

The labour department said Thursday that "the average of new jobless claims have slipped by 1,250". The decreasing volatility of the 4 week average is seen as an astute measure of labour market trends.

There has also been further jobless claim drops by 25,000 to 2.13 million on July 9, "The claims which are reported with a 1 week delay reflect that people are already receiving unemployment checks"

The US Initial Jobless Claims calculates the number of people who filed for unemployment insurance for the first time during the past week. A greater than expected value would be seen as a bearish signal on the USD and a lower than expected value would be positive for the USD.