There was also a further element of optimism that the Euro-Zone economy is poised for at least a tentative rebound.
The Euro to Dollar (EUR/USD) exchange rate recovered from initial losses to 1.0725 and posted a net gain to 1.0780.
The Pound to Dollar (GBP/USD) exchange rate also moved back above the 1.1500 level, recovering from earlier lows just below 1.2450 after the Bank of England policy decision.
US initial jobless claims increased to 231,000 in the latest week from a revised 209,000 the previous week. This was above substantially above consensus forecasts of 212,000 and the strongest reading for 8 months.
Continuing claims also increased to 1.79mn from 1.77mn the previous week.
There was a significant impact on the data from additional claims in New York during school holidays.
J P Morgan economist Daniel Silver commented; "Given that the varied timing of school spring breaks, and holidays like Easter and Passover, makes the seasonal adjustment process very complicated, we often see volatile readings in the seasonally adjusted data around this time of year."
Pantheon Macroeconomics Chief Economist Ian Shepherdson also considered that the increase in claims could be related to; "Citigroup employees laid off in January but paid through April making their first claims."
In this context Stephen Stanley, chief US economist at Santander US Capital Markets LLC, commented. “I cannot promise that the seasonally adjusted figure will fully reverse back to 210K next week, but I feel very safe in predicting a noticeable fall in the measure.”
Even if the jobless claims data is distorted, survey evidence has indicated a softer labour market and there are wider doubts surrounding consumer spending trends.
Significant weakening would curb growth and potentially undermine the dollar.
According to ING; “The US growth story remains driven by consumer resilience. High income households are in a great financial position, but those on lower incomes are feeling intensifying stress. How these competing stories play out will be key to the growth outlook for the rest of the year and the prospect of Federal Reserve interest rate cuts.”
ING added; “If business surveys, such as the ISM employment series and the NFIB hiring intentions survey, are correct and job losses become a reality, it is difficult to see consumers as the driving force of economic growth in the second half of 2024 as they have been over the past few years.”