Jobless Claims in U.S. Decrease to Lowest Level in Seven Weeks

The GDP release from last night, and this piece of good new would surely help Fed normalize its policy and have the rate hike in place within the appointed time frame. Yes, USD will continue strength in 2015.

Unfortunately, there is a general seasonality in fourth quarter numbers, which generally improve somewhat due to seasonal hiring associated with the holiday shopping season. Most of these workers are laid off or do not transition to permanent positions after the holiday shopping season ends, so the general pattern is for jobless claims to increase throughout the first quarter of the new year.

By and large, however, the backdrop of the Fed's gradual normalization of interest rates going forward and starting, potentially, as early as mid-2015, militates in favor of a stronger dollar for the foreseeable future. Given the fact that 3.5% is considered an inflation neutral interest rate, however, the Fed has a long way to go from basically 0% to that figure if they are going to be doing it in .25-.5% increments (6-12 quarters at the very least, which is a year and a half to 3 years, minimum, since they are likely to implement an increase, watch for the effects, implement an increase, watch for the effects, and so on and so forth).

Kudos

Will the USD keep it's strength?