Intraday Market Thoughts

Jobless Claims Give USD a Pulse, Japan CPI Next

by Adam Button
Jul 24, 2014 22:30

The US dollar climbed steadily in New York trading after the best jobless claims report since 2006. It was the best performer on the day while the kiwi and Aussie lagged. Japanese CPI is due later.  In our Premium Insights, we issue fresh trades in EURUSD and GBPUSD with four new charts ahead of Friday's UK GDP & following today's PMI-driven EUR bounce. Sticking with our EURJPY and EURAUD shorts, especially as the latter entered at 1.46200, targeting 1.4200 missed its final target by 12 pips. We also await the final 1.1020 target in AUDNZD after the 1.0830 entry on Tuesday produced 1.1016 on Thursday, instead of the final 1.1020. All charts & trades are in the

The US dollar gained 20-40 pips across the board in NY hours in a steady grind after initial jobless claims improved to 284K from 303K. The reaction was an immediate rise in the dollar followed by a steady climb.

The data was strong enough that markets cast aside other, softer figures. June new home sales plunged to 406K from 475K and the Market manufacturing PMI slipped to 56.3 from 57.5 expected.

One of the main victims of USD strength was gold as it fell below the July low to the worst levels in one month at $1287. The 200-dma just below cushioned the losses and will be a key support line in the days ahead.

Taking a broader view of gold the inability to sustain a rally on a variety of geopolitical crises and repeated dovish headlines from the Fed is a discouraging signal and points to the downside potential.

Other news came from the IMF as global growth forecasts were cut in a widely expected move. US GDP was lowered to 1.7% from 2.8% in the most dramatic change. Emerging markets, especially Latam, was also downgraded. The good news was in the UK and Spain were forecasts for this year and next were boosted.

Looking ahead, the yen enters the spotlight with CPI numbers due at 2330 GMT. USD/JPY has risen for 5 straight days and touched a 3-week high Thursday and crossed the 55-dma. A weak CPI would start to kindle the fires for more QE or other measures. At the very least it could boost USD/JPY toward the June high at 102.50.

Act Exp Prev GMT
Tokyo CPI (JUL) (y/y)
3% Jul 24 23:30
Tokyo CPI ex Food, Energy (JUL) (y/y)
2% Jul 24 23:30
Tokyo CPI ex Fresh Food (JUL) (y/y)
2.7% 2.8% Jul 24 23:30
National CPI (JUN) (y/y)
3.7% Jul 24 23:30
National CPI Ex Food, Energy (JUN) (y/y)
2.2% Jul 24 23:30
National CPI Ex-Fresh Food (JUN) (y/y)
3.3% 3.4% Jul 24 23:30
GDP (Q2) (q/q) [P]
0.8% 0.8% Jul 25 8:30
GDP (Q2) (y/y) [P]
3.1% 3.0% Jul 25 8:30
Manufacturing PMI [P]
56.3 57.5 57.3 Jul 24 13:45
Nomura/ JMMA PMI Manufacturing (JUL) [P]
50.8 51.5 Jul 24 1:35
New Home Sales (m/m)
-8.1% -5.3% 8.3% Jul 24 14:00
Continuing Jobless Claims
2,500K 2,510K 2,508K Jul 24 12:30
Initial Jobless Claims
284K 308K 303K Jul 24 12:30
Jobless Claims 4-Week Avg.
302.00K 309.25K Jul 24 12:30

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