USD/JPY: Trading the US jobless claims June 2012

The 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 bearish for the dollar.

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.

The previous release came in at 386 thousand unemployed individuals, well above the market forecast of 377K. . This represented a seven-month high for the indicator. This week’s estimate stands at 381K. If the indicator again exceeds the forecast, it could be a sign that the US employment situation is getting worse.

Sentiments and levels

The fallout from the Greek elections and crisis in Spain could push the pair lower, as the yen remains the ultimate safe haven currency. However, the lack of QE by the Federal Reserve can provide support. So, the sentiment is neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 80.20, 80, 79.70, 79, 78.30, 77.50 and 77.

5 Scenarios

1. Within expectations: 375K to 387K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 368K to 374K: An unexpected lower reading can send the pair above one  resistance line.
3. Well above expectations: Below 368K: Strong employment numbers would be bullish for the dollar. Two or more lines of resistance might be broken on such an outcome.
4. Below expectations: 388K to 394K: A poor reading could push USD/JPY lower, and one support level could be broken.
5. Well below expectations: Above 394K. In this scenario, the pair could break below two or more support levels.

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

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