USD/JPY: Trading the US jobless claims Mar 2014

US Unemployment Claims, a key indicator, is released weekly. 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 important economic indicator of consumer confidence in the economy. It helps measure future 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.

Employment numbers out of the US have looked sharp, with the previous Unemployment Claims release hitting a three-month low.  The reading came in at 315 thousand, well  below the market forecast of 334K. This week’s estimate stands at 327 thousand. Will the indicator again beat the forecast?

Sentiments and levels

While the fears regarding China are already priced in, Ukraine returned to be a wild card. So, we could see the yen strengthening if events in the Ukraine push nervous investors to the safe-haven Japanese currency. However, the expected taper  by the Fed  on Wednesday could give a boost to the dollar, as another trim is a vote of confidence in the US economy by the powerful Federal Reserve. So, the overall sentiment is  neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 103.77, 102.74, 102, 101.35, 100.75 and 100.

5 Scenarios

1. Within expectations: 322K to 332K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 333K to 339K: An unexpected  higher  number of claims  can send the pair  below one  support line.
3. Well above expectations: Above 339K:  A spike in unemployment claims  could push USD/JPY downwards, and a second support lines might be broken on such an outcome.
4. Below expectations: 315K to 321K: A  strong reading  could push USD/JPY higher, and one resistance line could be broken.
5. Well below expectations: Below 315K. In this scenario, the pair could break  through a second line of resistance.

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

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