unemployment claims

GBP/USD accelerates on Friday. Yesterday, there were no significant events lined up in the UK, but the US data turned out to be slightly weaker than expected. Reports on unemployment claims and industrial production were worse than traders' expectations, but there were also reports that exceeded forecasts (retail sales).   Therefore, if the US data were not in favor of the dollar, it was not to the extent that it would fall by 140 pips in a day. On the other hand, the European Central Bank held its meeting, the results of which had no relation to the pound. In addition, the market had already expected its results a couple of weeks ago, if not more. And despite all that the pound still rallied, even more strongly than the euro. Thus, the pound extends its illogical growth. The first sell signal near the 1.2659 level turned out to be false. The price could not move in the right direction even by 20 pips, so the short position closed with a small loss at the beginning of the US trading session when a buy signal appeared. Later, the pair confidently rose to the 1.2762 level and surpassed it. No sell signals were formed for the rest of the day, so traders could close their long positions anywhere.     The profit from this trade amounted to at least 100 pips. COT report: According to the latest report, non-commercial traders closed 5,200 long positions and 4,500 short ones. The net position dropped by 700 but remained bullish. Over the past 9-10 months, the net position has been on the rise despite bearish sentiment. In fact, sentiment is now bullish, but it is a pure formality. The pound is bullish against the greenback in the medium term, but there have been hardly any reasons for that. We assume that a prolonged bear run may soon begin even though COT reports suggest a bullish continuation. However, we can hardly explain why the uptrend should go on.     The pound has gained about 2,300 pips. Therefore, a bearish correction is now needed. Otherwise, a bullish continuation would make no sense even despite the lack of support from fundamental factors. Overall, non-commercial traders hold 52,500 sell positions and 65,000 long ones. We do not see the pair extending growth in the long term. 1H chart of GBP/USD In the 1-hour chart, maintains a bullish bias. The ascending trend line serves as a buy signal but I believe that further growth of the British currency is groundless. The pound sterling has been climbing for too long and downward corrections are short-lived. Judging by the technical indicators, we have an uptrend.   Yet, it is hard to find the reasons which may push it higher. Nevertheless, the market has no logical reason to buy at the moment. On June 16, trading levels are seen at 1.2349, 1.2429-1.2445, 1.2520, 1.2589, 1.2666, 1.2762, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2472) and the Kijun-sen line (1.2638) may also generate signals when the price either breaks or bounces off them. A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance which can be used for locking in profits. On Friday, there are no important events lined up in the UK, while the US will only release the University of Michigan Consumer Sentiment Index. Since there are no significant events today, we might witness a slight bearish correction. However, the pound can still rise since it doesn't need any logical reason behind it.

ADP employment surprises with a huge gain of 497,000 On Friday, US releases nonfarm payrolls and Canada publishes the employment report Nonfarm payrolls are expected to fall to 225,000, Canada projected to add 20,000 jobs The Canadian dollar is in negative territory on Thursday. In the North American session, USD/CAD is trading at 1.3360, down 0.58%. The Canadian dollar has slipped over 1% since Wednesday.   ADP employment shows a massive gain  After the Fed minutes on Wednesday, the markets were awaiting the nonfarm payrolls on Friday. The ADP employment report, which precedes nonfarm payrolls, often gets no more than a cursory glance as it’s not considered a reliable precursor to the NFP. Thursday’s release, however, was simply too large to ignore. The ADP reported a gain of 497,000 in June, up from 267,000 in May and well above the consensus of 228,000. US nonfarm payrolls are expected to move in the opposite direction of the ADP report, with a consensus of 225,000 in June, down sharply from 339,000 in May. After today’s ADP shocker, Fed policy makers will be hoping that nonfarm payrolls decline as expected. If nonfarm payrolls follow the ADP lead and climb sharply higher, the Fed may be forced to raise rates more than expected in the second half of the year to cool the hot labour market. The money markets have repriced rate expectations for July following the ADP release. The probability of a 0.25% hike is currently at 94%, up from 86% prior to the ADP report. Fed Chair Powell has hinted at one more rate hike after July, but a September hike will be more likely if nonfarm payrolls rise on Friday. The ADP report grabbed all the headlines, but other employment numbers on Thursday could indicate that the labour market is slowly weakening. Unemployment claims rose from 236,000 to 238,000, higher than the consensus estimate of 245,000. As well, JOLTS Jobs Openings fell from 10.32 million to 9.82 million, shy of the consensus estimate of 9.93 million. The ISM Services PMI may be another headache for the Fed, as it jumped in June to 53.9, well above the May reading of 50.2 and the consensus estimate of 51.2 points. The report indicates that business activity is expanding and the economy remains strong, despite the Fed’s aggressive tightening cycle. Canada releases the June employment report on Friday. The economy is expected to rebound with 20,000 new jobs in June, after a loss of 17.3 thousand in May. The unemployment rate is projected to rise to 5.3% in June, up from 5.2% in May. . USD/CAD Technical USD/CAD is testing resistance at 1.3318. Next, there is resistance at 1.3386 1.3217 and 1.3149 are providing support  

Australia posts strong trade surplus US ADP employment surprises with massive gain US unemployment claims and ISM Services PMI will be released later on Thursday Thursday has been a busy day for AUD/USD. The Australian dollar rose after a strong Australian trade balance report but has reversed directions following a sparking US ADP employment release. In the North American session, AUD/USD is trading at 0.6639, down 0.20%.   Australia’s trade surplus widens Australia continues to post monthly trade surpluses, supported by exports of iron ore and natural gas to Asian Pacific countries. China’s recovery has been uneven but there has still been an increased demand for iron ore and coal from Australia. The June trade surplus was A$11.8 billion, above the consensus of A$10.9 billion. The Australian dollar gained ground on the strong trade surplus, only to give up all these gains after the US ADP employment report posted a massive gain of 497,000 in June, up from 267,000 in May and well above the consensus of 228,000. The ADP report is not considered a reliable indicator for Friday’s nonfarm payrolls release, but investors still keep an eye on it and the huge gain has boosted the US dollar against the major currencies. US nonfarm payrolls are expected to move in the opposite direction of the ADP report, with a consensus of 225,000 in June, down sharply from 339,000 in May. Later on Thursday, the US releases unemployment claims and the ISM Services PMI. Unemployment claims dropped sharply to 239,000 in the previous release and are expected to rise to 245,000. The ISM Services PMI has shown weak expansion in recent months, with readings slightly above the 50.0 level, which separates expansion from contraction. The June consensus stands at 51.0, slightly higher than the May reading of 50.3 points. . AUD/USD Technical AUD/USD continues to test resistance at 0.6659. This is followed by resistance at 0.6722 0.6597 and 0.6534 are providing support

UK jobs report expected to show strong employment and wage growth US nonfarm payrolls declined in June The British pound has drifted lower on Monday. GBP/USD is trading at 1.2827 in the European session, down 0.09%. UK employment data expected to remain strong The UK labour market remains resilient despite a cooling economy and high interest rates. Tuesday’s June jobs report is expected to show strong numbers. The economy is expected to produce 158,000 jobs in June, after a banner reading of 250,000 in May. The unemployment rate is projected to remain at a low 3.8% and unemployment claims are expected to continue declining. Wage growth is expected to rise to 6.8%, up from 6.5%. That sounds like great news, but not when you’re the Bank of England and need the labour market to show some cracks and wage growth to slow down. A tight labor market and strong wage growth have hampered efforts by the central bank to lower inflation and the OECD said last week that the UK was the only major economy where inflation is still rising. The May inflation report was a disappointment, with headline inflation remaining at 8.7% and the core rate rising from 6.8% to 7.1%. BoE Governor Bailey will likely comment on the job numbers and investors will be looking for clues about the BoE’s plans at the August 3rd meeting. The BoE has raised rates to 5.0%, but more tightening will be needed in order to curb inflation and the money markets have fully priced in a peak rate of 6.5% by February.   US dollar takes a hit after nonfarm payrolls decline The US dollar was broadly lower against the major currencies on Friday, after nonfarm payrolls slid to 209,000, below from the downwardly revised reading of 306,000 in May but not far from the 225,000 consensus estimate. The downturn may have surprised many investors who were caught up in the hype of a massive ADP employment release which showed a gain of 497,000. There was speculation of a blowout nonfarm payroll reading but in the end, the consensus estimate was close and the US dollar was broadly lower on expectations that the Fed could be close to winding up its rate-tightening cycle.   GBP/USD Technical GBP/USD tested support at 1.2782 earlier today. The next support level is 1.2716 There is resistance at 1.2906 and 1.2972  

UK employment falls but wage growth remains high BoE Governor Bailey says inflation will fall but more rate hikes needed The British pound has edged upward on Tuesday. In the European session, GBP/USD is trading at 1.2898, up 0.28%. The pound has put on an impressive rally, rising close to 200 pips against the dollar since Thursday.   UK employment softens, wages rise The UK delivered a mixed employment report for June. The economy created 102,000 jobs, far less than the 250,000 in May and shy of the consensus of 125,000. The unemployment rate rose from 3.8% to 4% and unemployment claims rose by 25,700, after a decline of 22,500 in May. However, wage growth excluding bonuses remained at 7.3% in the three months to May, above the consensus estimate of 7.1%. For Bank of England policymakers, the employment report is a good news/bad news release. The central bank needs the labour market to cool as it struggles to bring inflation down. To put it mildly, that battle has not gone as planned, with the OECD giving the UK the ignominious distinction of being the only major economy where inflation is rising. The June employment and unemployment numbers showed some cracks in the tight labour market, but wage growth, a key driver of inflation, remains stubbornly high. The takeaway from the jobs report is that the labour market is a bit less tight but wage growth remains inconsistent with the 2% inflation target and the BoE will have to continue to tighten policy. The cash rate is currently at 5.0% but the money markets have priced in a peak rate of 6.5%, which means that more pain is coming for businesses and households in the form of higher interest rates. BoE Governor Bailey is doing his best to put a brave face on a difficult situation. On Monday, Bailey said that inflation would fall “markedly” due to falling energy and food prices, but more rate hikes would be needed to bring inflation down from the current 8.7% to the 2% target.   GBP/USD Technical GBP/USD tested support at 1.2782 earlier today. The next support level is 1.2716 There is resistance at 1.2906 and 1.2972  

Recent macroeconomic readings, including wages, GDP, and industrial production, have provided valuable insights into the current state of the British economy. These key indicators have prompted discussions about the depth of the potential recession and the future actions of the Bank of England (BoE). To gain a better understanding of these developments, we turn to Antreas Themistokleous, an expert in the field. The release of major economic data from the UK this week shed light on the condition of the British economy. The unemployment rate for May saw a 0.2% increase, reaching 4%, and the number of unemployment claims surpassed expectations, indicating a higher demand for unemployment benefits. On the other hand, average earnings experienced a 0.2% growth, while year-over-year GDP showed a decline of -0.4%. Although the GDP figure was not as dire as anticipated, it still reflects a subpar performance compared to the same period last year. Industrial production also fell by 2.3%, aligning with market forecasts.     FXMAG.COM: What do this week's macroeconomic readings - wages, GDP, industrial production - tell us about the state of the British economy? Will the recession be deep? Will the BoE continue to raise rates?   Antreas Themistokleous:  This week we saw major economic data from the UK being released that could help in determining the state of the British economy. Unemployment rate for the month of May increased by 0.2% pushing the figure to 4% while the Claimants came out to be worse than expected, missing expectations of negative 22,000 claims to a positive 25,700. This means more people claimed for unemployment benefits in May and that was reflected in the official unemployment rate.  On the other hand average earnings have increased by 0.2% while the year over year GDP growth came out at -0.4%. Even though the GDP was expected to be worse , at -0.7% , it still shows that the British economy did not perform very well compared to the same month last year. Industrial production recorded a negative 2.3% perfectly aligned with market expectations.    Inflation rate for the month of June is expected to be published on the 19th where the market expects a further decline of around 0.4%. If this is confirmed it would be the yearly low and could potentially boost the quid against its pairs, especially USD and the Euro at least in the short term.    Even though inflation might be coming down, it does so at a very slow pace so the Bank of England could still have a hawkish stance at their next meeting on the 3rd of August. In June, the Bank of England increased interest rates for the 13th time in a row, by 50 basis points to 5% while some analysts argue that they could peak around 5.75% by the end of this year.    By paying attention to the labor market and the economic growth we will be able to gauge the consequences of the rate hikes by the central bank and how it could affect the overall economy. Recession fears are still hovering above the heads of the British since they are not “out of the woods” just yet but the stance of the central bank in regards to their monetary policy will be closely monitored by market participants.       

The price of gold climbed as much as 1,963 today, registering a new high. Still, the price action signaled exhausted buyers in the short term, so temporary retreats or sideways movements are natural. It's trading at 1,960 at the time of writing.   Fundamentally, XAU/USD stays higher as the US reported mixed data yesterday. The PPI rose by 0.1% less versus the 0.2% growth expected, while Core PPI reported a 0.1% growth versus the 0.2% growth forecasted. Furthermore, the Unemployment Claims came in at 237K versus 251K estimates. Today, the US Prelim UoM Consumer Sentiment represents a high-impact event and is expected at 65.5 points versus 64.4 points in the previous reporting period. Better-than-expected data could force XAU/USD to drop.   XAU/USD Accumulation!   As you can see on the H1 chart, XAU/USD extended its growth after retesting the 1,935 - 1,931 broken resistance area. Now, it has stabilized above the weekly R2 (1,953) and is fighting hard to reach the upper median line (uml). Technically, the 1,967 former high represents an upside target and resistance. False breakouts through this resistance may announce a potential sell-off. Dropping and closing under the R2 (1,953) activates a larger drop towards the median line (ml).    

UK job growth falls but wages soar UK releases CPI on Wednesday The British pound has edged higher on Tuesday. In the European session, GBP/USD is trading at 1.2697, up 0.08%.   UK job market cools but wages jump Investors were treated to a mixed UK employment report today. The labour market, which has been surprisingly resilient in the face of the Bank of England’s tightening, is showing unmistakable signs of cooling. Employment fell by 66,000 in the three months to June, a huge reversal from the 102,000 gain in the previous period. The consensus estimate stood at 75,000. Notably, this was the first decline in job growth since August 2022. The unemployment rate rose from 4.0% to 4.2%, above the estimate of 4.0%, and unemployment claims rose to 29,000, up from 16,200 and above the estimate of -7,300. The one exception to the soft jobs report, but a critical one, was wage growth. Average earnings excluding bonuses rose 7.8% y/y in the three months to June, up from 7.5% and above the estimate of 7.3%. This was the highest level since records began in 2001. Average earnings including bonuses jumped 8.2%, compared to an upwardly revised 7.2% previously and above the estimate of 7.3%. The jump in wage growth will be unwelcome news for the Bank of England, as it indicates that the dreaded wage-price spiral continues to feed inflation. Higher wages are a key driver of inflation, and the BoE has warned that if wage growth doesn’t ease, it will be forced to raise rates even higher. This could mean that the weak UK economy will tip into a recession, but the BoE considers that the lesser evil compared to high inflation.   The BoE meets on September 21st and I do not envy Governor Bailey, who may have to cause more financial pain and raise rates. The UK releases the July inflation report on Wednesday, with CPI expected to fall to 6.7%, down from 7.9%. That would be a significant decline but it would still leave inflation more than triple the BoE’s target of 2%. The BoE and investors will be glued to the inflation report and I expect the British pound to have a busier day.   GBP/USD Technical GBP/USD is testing resistance at 1.2726. The next resistance line is 1.2787  1.2634 and 1.2573 are providing support    

Overview of macroeconomic reports   On Thursday, no significant reports lined up for the UK, the European Union, or Germany. The US will publish reports on initial jobless claims and durable-goods orders. Unemployment claims is a relatively weak indicator simply because it is published weekly, and deviations from forecasts are rare. Since there are no deviations, there is no market reaction. Durable goods orders are more important as it reflects the change in purchase volumes of expensive category goods, such as cars, real estate, or major appliances. But the same thing applies here, it is important for the values to deviate from forecasts. If there is none, there's also no reaction. If there is, then we can expect a strong market reaction.   Overview of fundamental events There is absolutely nothing to highlight among Thursday's fundamental events. There are no speeches from officials of the Federal Reserve, European Central Bank, and the Bank of England. However, the Jackson Hole Symposium is about to begin. Nonetheless, all the most important speeches are scheduled for Friday, and today, there's not much to focus on.     Bottom line On Thursday, beginners might only focus on the two US reports. We don't know if they will trigger a market reaction, but at the same time, there are no other events. The movement patterns of the two main currency pairs are unlikely to change. For the euro, it's a downtrend, and for the pound, it's a flat trend. Main rules of the trading system: The strength of the signal is calculated by the time it took to form the signal (bounce/drop or overcoming the level). The less time it took, the stronger the signal. If two or more trades were opened near a certain level due to false signals, all subsequent signals from this level should be ignored. In a flat market, any currency pair can generate a lot of false signals or not generate them at all. But in any case, as soon as the first signs of a flat market are detected, it is better to stop trading. Trades are opened in the time interval between the beginning of the European session and the middle of the American one when all trades must be closed manually. On the 30-minute timeframe, you can trade based on MACD signals only on the condition of good volatility and provided that a trend is confirmed by the trend line or a trend channel. If two levels are located too close to each other (from 5 to 15 points), they should be considered as an area of support or resistance. Comments on charts Support and resistance levels are levels that serve as targets when opening long or short positions. Take Profit orders can be placed around them. Red lines are channels or trend lines that display the current trend and show which direction is preferable for trading now. The MACD (14,22,3) indicator, both histogram and signal line, is an auxiliary indicator that can also be used as a source of signals. Important speeches and reports (always found in the news calendar) can significantly influence the movement of a currency pair. Therefore, during their release, it is recommended to trade with utmost caution or to exit the market to avoid a sharp price reversal against the previous movement. Beginners trading in the forex market should remember that not every trade can be profitable. Developing a clear strategy and money management is the key to success in trading over a long period of time.    

ECB financial stability review warns of stress Fed minutes point to rates remaining restrictive The euro is in negative territory on Wednesday. In the North American session, EUR/USD is trading at 1.0864, down 0.42%. ECB says banks showing stress The ECB released its semi-annual financial stability review earlier today and warned of stress in financial stability in the eurozone. The report found that tighter financial conditions were making it difficult for households, businesses and governments. In short, the financial stability outlook remains fragile. The review warned that the Israel-Hamas war posed the risk of affecting the supply of oil, which could push inflation higher and dampen growth. The economic picture in the eurozone is not encouraging, as the eurozone economy is stagnating and Germany, once a global powerhouse, has become a deadweight in the eurozone with its weak economy. The euro has jumped 2.8% against the US dollar in November, but that is more a case of US dollar weakness due to expectations of rate cuts in the US rather than strength in the euro. In the US, unemployment claims were lower than anticipated, coming in at 209 thousand. This was below the market consensus of 225,000 and the previous revised release of 233 thousand. The reading indicates that the labour market is still showing signs of strength, which supports the Federal Reserve’s rate policy of higher for lower. The Federal Reserve minutes of the November meeting stated that the Fed plans to proceed with caution and will be keeping an eye on the data in making future rate decisions. The minutes made no reference to any discussion at the meeting about rate cuts, consistent with Jerome Powell’s comments after the meeting that the Fed “is not thinking about rate cuts at all”. The markets would beg to disagree and have priced in a rate cut in mid-2024.   EUR/USD Technical There is resistance at 1.0951 and 1.1017 1.0831 and 1.0748 are providing support