US initial jobless claims increased to 236,000 for the week ending December 6, according to the US Department of Labor. This was higher than the expected 220,000 and up from last week’s revised figure of 192,000. The 4-week moving average for initial claims rose to 216,750 from 214,750. In contrast, seasonally adjusted continuing jobless claims decreased by 99,000 to 1.838 million for the week ending November 29.

Revised Unemployment Figures

Revisions showed last week’s continuing claims fell from 1.939 million to 1.937 million. The insured unemployment rate dropped from 1.3% to 1.2%, and the 4-week moving average for continuing claims decreased to 1.918 million. After these reports, the US Dollar hit its lowest point since October 17. The US Dollar Index (DXY) was around 98.28, with the USD performing variably against other major currencies. The currency heat map showed percentage changes among major currencies. The US Dollar was strong against the Australian Dollar but weak against the Euro and British Pound. The rise in initial jobless claims to 236,000 signals a possible slowdown in the US labor market, which adds to the dollar’s recent decline. We may continue to see this trend as the year ends, making bearish positions on the US dollar appealing. Options strategies that benefit from a drop in the US Dollar Index (DXY), like buying puts, could be effective as the index nears its eight-week low around 98.28.

Federal Reserve Rate Cut Expectations

This data raises expectations for another Federal Reserve rate cut in early 2026, influencing market attitudes. Looking back to late 2019, we saw a similar weakening in labor data before rate cuts, indicating we can use interest rate futures to prepare for lower rates ahead. The market currently sees over a 70% chance of a cut by the March 2026 meeting, a likelihood that may rise if data remains weak. However, the decrease in continuing jobless claims indicates the labor market is not collapsing, which may cause uncertainty and market fluctuations. This mixed data paired with a divided Fed suggests we may experience higher volatility in the coming weeks. Buying options on major indices could be a smart move to take advantage of possible price swings, as this strategy worked well during the volatile periods of 2022 when the Fed faced similar economic signals. The weaker dollar and falling rate expectations are very positive for gold. With gold already rising past $4,270 an ounce, it seems to be on an upward trend. We can use gold futures or call options to benefit from this strong momentum, similar to historic rallies during times of Fed easing and economic uncertainty. The Swiss Franc and Japanese Yen are showing notable strength against the dollar, benefiting from their safe-haven appeal amid economic concerns. The dollar fell 0.64% against the Franc and 0.50% against the Yen today, indicating a shift toward safer assets. We should consider currency options that take advantage of continued strength in these pairs against the US dollar in the coming weeks. Create your live VT Markets account and start trading now.

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