USD/JPY: Trading the US jobless claims Feb 2015

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.

Update:  US jobless claims fall to 283K – better than expected  

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

Published on Thursday at 13:30 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.

Unemployment Claims jumped last week, climbing to 304 thousand. This was well above the previous reading of 278 thousand and the forecast of 282 thousand. The upcoming release is expected to drop back below the 300 thousand level, with an estimate of 293 thousand.

Sentiments and levels

The Japanese economy continues to wrestle with weak inflation, raising the possibility of further easing from the BOJ, which would hurt the yen. In  the US, the markets will  be keeping a  close eye on the Federal Reserve minutes – if there are hints about a rate hike later in the year, the US dollar could posts broad gains. So, the sentiment is  bullish on USD/JPY towards this release.

Technical levels, from top to bottom: 122.19, 121.39, 119.88, 117.94,  116.82 and 116.02.

 

5 Scenarios

1. Within expectations: 290K to 296K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 297K to 301K: An unexpected  higher  number of claims  can send the pair  below one  support line.
3. Well above expectations: Above 301K:  Weak employment numbers  could push USD/JPY downwards, and two or more support lines might be broken on such an outcome.
4. Below expectations: 285K to 289K: A  strong reading  could push USD/JPY higher, and one resistance line could be broken.
5. Well below expectations: Below 285K. 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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