US Unemployment Claims is released weekly, and measures the number of people filing for unemployment for the first time. It is considered an important measure of the health and direction of the US economy. A reading which is higher than the market forecast is bullish for the euro.
Update: US jobless claims at 287K – USD slightly recovers
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Thursday at 12:30 GMT.
Indicator Background
Analysts closely monitor employment data, and Unemployment Claims provides them the opportunity to track the US employment picture on a weekly basis. The labor market is highly correlated with economic growth, making the indicator one of the most closely watched indicators.
Unemployment Claims dipped last week, dropping to 287 thousand. This easily beat the estimate of 299 thousand, as US employment numbers continue to look sharp. The markets are expecting a slightly higher figure in the upcoming release, with the estimate standing at 291 thousand.
Sentiments and levels
European fundamentals remain week, despite the ECB having lowered interest rates to boost growth and inflation levels. These efforts have not borne fruit, as inflation is at rock bottom levels (despite the rise in import prices due to the lower euro), growth is non-existent and unemployment remains high. The US dollar had its moment of weakness, but the excellent jobs report has allowed the greenback to remain at very high levels against the euro. Expectations for an early rate hike could rise with the FOMC minutes and this would likely bolster the dollar. All in all, as EUR/USD has more room to fall. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.28, 1.2750, 1.27, 1.2660, 1.2570 and 1.25.
5 Scenarios
- Within expectations: 284K to 298K: In such a case, EUR/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 299K to 306K: An unexpected higher reading (more claims than expected) can send the pair above one resistance line.
- Well above expectations: Above 306K: Weak employment numbers would be bearish for the dollar. Two or more resistance lines could be broken on such an outcome.
- Below expectations: 276K to 283K: A strong reading could push EUR/USD lower, and one support line could be broken.
- Well below expectations: Below 276K. A sharp decrease in unemployment claims could lead to the pair breaking two or more support levels.
For more on the Euro, see the EUR/USD forecast.
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