The EURUSD currency pair, a key indicator of economic health and investor sentiment, has been hovering around 1.0500 following the release of the latest US Unemployment data on October 5, 2023.
The report from the US Department of Labor revealed that initial jobless claims had risen slightly from 205,000 to 207,000.
EURUSD Daily Chart
GBPUSD Loses Its Recovery Momentum
The GBP/USD exchange rate has been experiencing some volatility. As of October 5, 2023, the British Pound (GBP) had a bit of a pullback against the US Dollar (USD) after rising above 1.2150, retreating toward 1.2100.
This retreat comes amidst a cautious market stance that is benefitting the USD, as it allows the currency to maintain its ground and limit the pair’s upside. Investors are likely waiting for comments from Federal Reserve officials, which could provide more insight into the future direction of monetary policy
Earlier, the Pound Sterling (GBP) has been unable to gain against the US Dollar due to disapointing UK Construction PMI data. S&P Global reported a Construction PMI figure of 45.0 for September, which is significantly lower than the anticipated 49.9 and the previous month’s figure of 50.8.
The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. A PMI rating below 50 typically indicates a contraction in the sector. This disappointing figure suggests a downturn in the UK’s construction sector, likely influenced by higher mortgage rates causing households to delay their demand for new homes.
However, the impact of this weak Construction PMI data on the GBP/USD exchange rate may be limited, as the construction sector represents a relatively small part of the UK economy. Despite this, the GBP/USD pair has remained below key resistance levels, such as the 50-day and 200-day Exponential Moving Averages (EMAs), indicating bearish price signals.
GBP/USD Daily Chart
USDJPY Maintains a Consolidative Mood Between 145.90 & 150.50
The USD/JPY currency pair appears to be currently experiencing some volatility. Earlier in the European Session, the pair was traded at 148.900012.
Recently, the USD/JPY has seen a tumble toward 147.00, with the Japanese Yen showing significant strength3. This movement could be due to signs of possible currency market interventions.
Technical analysis suggests that the USD/JPY is retesting the 20-day moving average support, indicating a bearish momentum. However, the pair seems to be maintaining a consolidative mood between 145.90 and 150.50, demonstrating some resilience despite an intraday dip to 148.25.
USDJPY Daily Chart
Initial Jobless Claims Edge Up
The report from the US Department of Labor revealed that initial jobless claims had risen slightly from 205,000 to 207,000.
| Week Ending | Initial Claims | Change from Previous Week | Revised Level | 4-week Moving Average | Change from Previous Week’s Average | Revised Average |
|---|---|---|---|---|---|---|
| September 30 | 207,000 | +2,000 | Up by 1,000 from 204,000 to 205,000 | 208,750 | -2,500 | Up by 250 from 211,000 to 211,250 |
| Week Ending | Seasonally Adjusted Insured Unemployment Rate | Change from Previous Week | Insured Unemployment | Change from Previous Week | Revised Level | 4-week Moving Average | Change from Previous Week’s Average | Revised Average |
|---|---|---|---|---|---|---|---|---|
| September 23 | 1.1% | No change | 1,664,000 | -1,000 | Down by 5,000 from 1,670,000 to 1,665,000 | 1,667,500 | -5,000 | Down by 1,250 from 1,673,750 to 1,672,500 |
This increase, albeit small, has created a challenging environment for the dollar to gain additional strength. It’s a subtle reminder that despite robust economic recovery, there are still pockets of weakness in the labor market that need to be addressed.
Over the past week, the dollar had been on an upward trajectory, bolstered by several factors. Firstly, the Jolts report indicated a rise in job openings, painting a picture of a strong labor market. This is generally seen as a precursor to inflationary pressures, which could prompt the Federal Reserve to tighten monetary policy.
Further adding to the dollar’s strength were hawkish comments from the Federal Reserve. Such remarks often signal potential interest rate hikes, which typically boost the value of the dollar as it increases returns for dollar-denominated assets.
However, this strengthening of the dollar and the prospect of tighter monetary policy have led to a rise in Treasury yields. Higher yields can make bonds more attractive to investors, potentially drawing investment away from stocks. This dynamic has put pressure on the stock market, prompting a sell-off.
As the day progresses, investors are likely turning their attention to comments from FOMC members. Their statements could offer further insight into the future direction of monetary policy and provide clues about how the central bank views the current economic landscape.
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