USD Jumps As Labour Market Tightens Further
The USD is showing some signs of life after declining for two weeks, as unemployment claims fall, suggesting a tighter jobs market
During most of the day, trading markets have been relatively calm and less active, as investors seemed to be moving at a slower pace, waiting for more evidence from the US from the economic data. During the European session, there were no major economic data releases, but there were some interesting developments in the Asian session that caught investors’ attention.
The Australian dollar showed strength and was leading the gains after some decent data early in the morning. One of the factors contributing to its rise was a positive labor market report, indicating a more stable employment situation in Australia. Additionally, the Australian dollar was supported by a stronger Chinese yuan. The People’s Bank of China (PBOC) took steps to facilitate cross-border funding, which had a positive impact on the Yuan’s value. At the same time, the PBOC implemented measures to deter speculation, resulting in a significant strengthening of the onshore Yuan’s value.
In the US session, we had the Philly Fed Manufacturing Index which remained negative at -13.5 points, missing expectations of -10.1%, while Existing Home Sales fell to 4.16 million in June from 4.30 million in May. Although, markets are concentrated on the labour market and the decline in unemployment claims from 237K to 228K, suggesting that the labour market is tightening globally, after this morning’s employment report from Australia. So, the USD jumped higher on the headline number and it is running away with it at the time being. We have turned short on Gold and risk currencies until the decline stops.
US initial jobless claims and continuing claims for the current week
- Prior week initial jobless claims 237K
- Initial jobless claims 228K versus 242K estimate
- 4-week moving average dipped to 237.5K vs 246.75K last week
- Continuing claims 1.754M versus 1.729M estimate
- prior week continuing claims 1.729M revised to 1.721M estimate
- 4-week moving average continuing claims dipped to 1.7315M versus 1.7333M last week.
For the full report CLICK HERE.
The data in the initial claims corresponds with the BLS survey week. That is better than last month. The continuing claims did tick to the upside after trending more to the downside of late:
Gold XAU Live Chart
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