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US Unemployment Claims, which is released weekly, is one of the most important  economic indicators.  It measures the number of people who filed for unemployment for the first time during the previous week. A reading which is higher than the market forecast is bullish for the Japanese yen.

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

Published on Thursday at 12:30 GMT.

Indicator Background

Unemployment claims is  a critical  gauge  of the health of the US economy. It helps measure future consumer spending behavior, as more jobs leads to increased spending. In turn, an increase in consumer spending sends a strong signal that the economy is healthy and growing.

Last week’s release came  in at an outstanding 292 thousand,  well  below the estimate of 332 thousand. However,  the Department of Labor quickly issued a statement that the numbers were inaccurate, as technical problems in two US states had resulted in some  claims not being processed. At the same time, the four-week  reading hit a multi-year low. Employment releases will continue to be  under the market microscope as we wait for  the Fed to taper QE.  This week’s estimate stands at 331 thousand and a reading not in line with this estimate could shake up USD/JPY.

Sentiments and levels

The markets continue to speculate about QE tapering, and we could get an idea about the Fed’s plans when the FOMC meets later on Thursday. Septapering is a possibility, although the more likely scenario is that the Fed will wait for the US releases, especially employment numbers, to improve. So, the sentiment is  bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 101.44, 100.85, 100, 98.90, 97.80,   and 96.71.


5 Scenarios

  1. Within expectations: 326K to 336K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 337K to 343K: An unexpected  higher  number of claims  can send the pair  below one  support line.
  3. Well above expectations: Above 343K:  Weak employment numbers  could push USD/JPY downwards, and two or more support lines might be broken on such an outcome.
  4. Below expectations: 319K to 325K: A  strong reading  could push USD/JPY higher, and one resistance line could be broken.
  5. Well below expectations: Below 319K. In this scenario, the pair could break  through two or more lines of resistance.

For more on the yen, see the USD/JPY forecast.

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