The weekly initial Claims rose to 554K from a revised 524K (from 522K). COntinuing Claims fell to 6225k from 6313K. This was lower than expected and the lowest level since April 10th week. The Continuing Claims peaked at 6904K.
There was early demand in the Far East for the riskier trades. Generally this manifests in selling JPY and buying of EURO, GBP and AUD.
The USDJPY benefited from the move as well. USDJPY. The pair remains toward the middle of the longer term channel and is also at the midpoint of the move up from the January low (87.11) to the April high (101.60). That level comes in at 94.27. Watch this level today. The 200 day moving average looms above at the 95.28 level. This is the next upside target for the pair.
On the hourly basis, the 100 hour moving average come below at the 93.99 level. We will be looking for buyers against this level on dips today. The bias is to the upside.
The EURJPY on the daily chart has been above the 100 day moving average for the last 7 days. The current 100 day moving average comes in at 131.92. This could indicate the market is basing and looking for a move to the upside. Above I am watching the old trendline which has contained the topside. That level comes in a at the 135.12 level (see chart above).
On the hourly chart, after a sideways market yesterday, the price surged higher but found sellers against the high from Tuesday at the 134.48 level (high reached 134.50). The week high remains another upside hurdle at the 134.74 level. The 100 hour moving average at the 133.44 level is another support level for the day. The risk trades, like EURJPY, tend to get a boost with an increasing stock market in the US.
GBPJPY is running into resistance at the 155.86 level today but note the price has been able to close above the 100 day moving average on the recent correction. This gives the pair a bullish bias from the LT perspective. The old trendline has contained the move back up and will be a hurdle to get through on the upside.
The weekly US Initial Claims willl be released at 8:30 AM. Last week, the claims remainded below 600 k for the sec0nd week in a row when it came in at 522K. This was down 47K from the week prior. However, it was noted that the number was influenced by faulty auto seasonals. It nevertheless was the lowest level since the January 2nd 2009 week and that is imporovement
This week the expectation is for Claims to come in at 555K. Continuing Claims which came in at 6273K – the lowest level since the April 17th week, is expected to rise back up to to 6390K.
Fed Chairman Bernanke is concerned about the revovery and especially a recovery in employment. In an article in the Wall Street Journal it speaks of the possibility that although GDP growth may recover in the future, the level of employment may not.
I would guess that employers will be reluctant to hire any time soon. The recession has made a lot of businesses reevaluate the employment picture and the cost structure of their businesses and make the cuts. Those do not come back quickly. In fact, the cuts are helping some companies earnings as there are productivity improvements which are going to the bottom line – i.e. less workers creating the same output, increase productivity. IBM benefitted greating by lower costs and higher productivity.
For the forex market this morning, it is a quiet day so far. Oil and gold look unchanged on the day. The pre opening stocks show smallish gains. In the UK Retail Sales rose by a much larger than expected +1.2% (VS +0.3%e) and Mortgage Approvals for the month also rose handsomely. Within the Retail Sales Total Non Food Sales rose by 1.6% – rebounding from the -1.9% decline in the prior month. Food Store sales also rose but by a smaller 0.7%. The increase in discretionary non food sales is a good sign as is the increase in Mortgage Approvals which rose to 35,235 from 31,919. This was the highest level since March 2008 and the 6th rise for the last 7 days.
Despite the stronger data, the GBPUSD hass remained below the highs reached on Monday at the 1.6555 level (high reached 1.6543). Remember above is the high close for the year at the 1.6589 level. On a closing basis, the GBPUSD has been largely contained by 1.6317 on the downside and 1.6589 on the upside since June 1 (see chart below). There have been a few closing moves to the downside but they were reversed. Yesterday, the low in the GBPUSD dipped to 1.6309 – just below the low close floor – but bounced quickly. Keep these level in mind. A break above or below should lead to increased momentum in the direction of the break.
