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Jobless number feeds into dollar rally

The chart on the weekly jobless claims data — once a relatively minor indicator — is truly impressive, and this morning’s release does nothing to change that.

In fact, with initial claims only edging up 18,000 in the first week of the year, economists are actually impressed. They had expected a slightly more serious increase after claims hit their lowest level since late 2008 in the previous week.

While it is true that at 409,000, the number of people filing for unemployment benefits is still quite elevated from historical standards — but it is nothing like the 650,000 jobs a week the credit crunch was destroying at the peak of the layoffs in early 2009.

Given the holidays, it is also significant that the four-week moving average, a better gauge of the trend, continued to dip and now stands at 410,750, lower than at any time since July 2008.

The dollar is getting a boost here as fundamental sentiment on the U.S. economy finally brightens. This is one of the few places where the employment situation looks like it is actually normalizing.

Watch commodities for signs they are decoupling from the dollar trade. And start watching the Fed to see where and when it admits that the economy is showing signs of life again.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.