Forex Signals Brief December 7: Unemployment Claims After 2 Soft Employment Reports
The economic data yesterday was mostly disappointing, starting with the Q3 GDP numbers from Australia, which showed a 0.2% growth against the 0.5% expected. The negative data continued in the European session, with the German industrial orders and UK construction output posting a decline for November, while the Eurozone retail sales slowed further to just 0.1%. Although the market reaction was mixed, with risk assets such as stocks going up, while risk currencies declined.
Unemployment claims expected to remain little changed
In the US session, we had the ADP employment report, which came at 103K, versus the predicted 130K. That’s the second soft jobs report after the JOLTs job vacancies yesterday showed a bigger-than-expected slowdown more. Although the USD continued to push higher after a small dip, with the report showing a soft landing and no recession.
Later on, the Bank of Canada held its monthly meeting and kept interest rates unchanged at 5.0%, as predicted. However, they maintained their willingness to raise rates further if necessary, although I don’t think the market expects anything else from them. Fresh data show that the Canadian economy is no longer experiencing surplus demand, while indicators show that its monetary policy is effectively slowing spending, which is contributing to the economy’s slowdown. So, the CAD ended up lower yesterday, but that was mostly coming from the USD strength.
Today’s Market Expectations
The Tokyo core CPI inflation numbers were released early tonight, and they were expected to show a slowdown to 2.4% in November from 2.7%. The headline inflation reached 3.3% in October, up from 2.8% in the previous month and exceeding expectations. Analysts at CapEco predict that the November figure will decline to 2.9%, resuming the year’s downward trend.
The weekly release of US Jobless Claims which is expected to be released latrer in the US session is a more immediate indicator of the status of the labor market and it garners importance today after two softer employment reports earlier this week, coming before the NFP release tomorrow as well. Initial Claims remain low, indicating that layoffs have not yet increased significantly, but Continuing Claims are rapidly rising, indicating that people are finding it more difficult to find another job after being laid off. The consensus for Initial Claims is close to last week’s number.
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