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The impressive drop in the US jobless claims last week was the match that started the fire in USD/JPY. Well, this week’s unemployment claims disappointed with a jump to 360K, and this sent the dollar rising.

In addition, CPI and housing starts also disappointed, and the rise in building permits wasn’t enough to keep the dollar up.

Data

  • Employment: were expected to rise from 328K (revised higher from 323K) to 332K. However, the leaped to 360K. As employment is in the limelight for the Fed, this barometer had the strongest impact. This is well above recent levels. The four week moving average now stands at 339.25K. This shows how far the 360K figure stands. Continuing claims stand at 3.009 million.
  • Inflation: Following the weak PPI figures from yesterday, also CPI fell short of expectations. The Consumer Price Index dropped by 0.4%, more than 0.3% that was expected. Core CPI, which is closely watched by the Fed, rose by only 0.1%, and not by 0.2% that was predicted. With these numbers, there is absolutely no pressure for the Fed to look for the exits: there is no inflationary pressure. Year over year CPI is only 1.1%.
  • Housing: The housing sector led the economic recovery, and signals here are not so bad: the message is mixed. Housing starts dropped from a pace of 1.02 million (revised down from 1.04) to only 0.85. A number of 0.98 was expected. On the other hand, building permits saw a similar move in the direction, with similar numbers: from 0.89 to 1.02 million (annualized), significantly more than 0.94 that was estimated.

Dollar falling

Are these figures an opportunity for dollar bulls to take a profit before the next move (as seen beforehand)?

Or is the dollar rally over?

— updates coming —