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EUR/USD: Trading the US Unemployment Claims Oct 2014

US Unemployment Claims is released weekly, and measures the number of people filing for unemployment for the first time. It is considered an important measure of the health and direction of the US economy. A reading which is higher than the market forecast is bullish for the euro.

Update:  US jobless claims at 287K – USD slightly recovers

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Thursday at 12:30 GMT.

Indicator Background

Analysts closely monitor employment data, and Unemployment Claims provides them the opportunity to track the US employment picture on a weekly basis.  The labor market  is highly correlated with economic growth, making the indicator one of the most closely watched indicators.

Unemployment Claims dipped last week, dropping to 287 thousand. This  easily beat  the estimate of 299 thousand, as US  employment numbers  continue  to look sharp. The markets are expecting a slightly higher figure in the upcoming release, with the estimate standing at 291 thousand.

Sentiments and levels

European fundamentals  remain week, despite  the ECB  having lowered interest rates  to boost growth and inflation levels. These efforts have not borne fruit, as  inflation is at rock bottom levels (despite the  rise in import prices due to the lower euro), growth is non-existent and unemployment remains high. The US dollar had its moment of weakness, but the  excellent jobs report has allowed the greenback to  remain  at very high levels against the euro.  Expectations for an early rate hike could rise with the FOMC minutes and this would likely bolster the dollar. All in all,  as EUR/USD has more room to fall. So, the overall sentiment is  bearish on EUR/USD towards this release.

 

Technical levels, from top to bottom: 1.28, 1.2750, 1.27, 1.2660, 1.2570 and  1.25.

5 Scenarios

  1. Within expectations: 284K to 298K: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 299K to 306K: An unexpected  higher reading (more claims than expected) can send the pair  above one resistance line.
  3. Well above  expectations:  Above 306K:  Weak employment numbers would be bearish for the dollar. Two or more  resistance lines  could be broken on such an outcome.
  4. Below expectations: 276K to 283K: A  strong reading could push EUR/USD lower, and one  support  line could be broken.
  5. Well below expectations: Below  276K. A  sharp decrease  in unemployment claims could lead to the pair breaking two or more support  levels.

For more on the Euro, see the EUR/USD forecast.

To follow this event live:   [do action=”calendar-event” eventid=”9c689bbf-af2a-4f65-81a8-c5f5e2b78d70″/]

 

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.