USD/JPY: Trading the US jobless claims Jul 2012

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 374 thousand unemployment claims, below the market forecast of 385K. . This represented a seven-month high for the indicator. This week’s estimate stands at 379K. Will the indicator again beat the market estimate?

Sentiments and levels

In the long run, US/JPY has room for rises. However, the weak global economy, ranging from Europe to China, increases yen flows. The possibility of QE3 in the US continues to weigh on the pair, especially after the unexciting NFP. So, the sentiment is neutral on USD/JPY towards this release.

Technical levels, from top to bottom: 80.20, 80, 79.70, 7910, 78.30 and 77.50.

5 Scenarios

1. Within expectations: 374K to 386K: In such a case, USD/JPY is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 367K to 373K: An unexpected lower reading can send the pair above one resistance line.
3. Well above expectations: Below 367K: Lower unemployment numbers would be bullish for the dollar. Two or more lines of resistance might be broken on such an outcome.
4. Below expectations: 387K to 393K: A poor reading could push USD/JPY lower, and one support level could be broken.
5. Well below expectations: Above 393K. 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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