According to the Department of Labor, jobless claims last week fell to 268K, which is a 9-week low.
(click to enlarge; souce: forexfactory.com)
Last week’s reading was 288K (revised up from 282K), and forecasts called for jobless claims reading around 286K. The general decline in claims for unemployment benefit over the years suggest businesses are optimistic about future sales and thus have been decreasing the pace of letting workers go. The thing is, this has not translated to real wage growth, which is a huge impediment for the FOMC to raise rates.
Meanwhile the trade balance for February showed a $35.4B deficit, which is the smallest deficit since November 2013, when it was -35.3.
(click to enlarge; source: forexfactory.com)
Today’s data should bode well for the USD, and when we look at the initial reaction in USD/JPY we do see some support above 119.50 after the data points.
While there was support, there is also resistance starting around 120 and we are already seeing some selling there in the hour following today’s data points.
Note that yesterday, as USD/JPY threatened the falling trendline, traders faded it after the ADP jobs data, which disappointed. It came in at 189K in March, lower than the 214K in February, and missing a forecast for an increase to 227K.
Now traders are waiting for tomorrow’s US NFP jobs report.
If price breaks above 120.50 after the jobs data, look for USD/JPY to revive the uptrend and at least test the 121.25 high with risk of breaking towards the high on the year around 122.
However, failure to close 120.50 could keep USD/JPY in consolidation, and a break back below 119.50 might put pressure back towards last week’s low of 118.33, with risk of extending to 118.00. in continuation of the March descent.
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