US Data (10/30): Q3 GDP and Jobless Claims; USD/JPY Reaction

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US Data (10/30): Q3 GDP and Jobless Claims; USD/JPY Reaction

According to the Bureau of Economy, the United States’ gross domestic product (GDP) grew 3.5% in third quarter. This beat forecasts of a 3.1% reading, but was lower than the 4.6% rate we saw in the second quarter.

US GDP q/q since 2000
US Q3 GDP

(click to enlarge; source: forexfactory)

This data shows a relatively sustained recovery, and should not change anything in terms of the Fed’s forward guidance on when it will raise interest rates – projected to be mid-2015.

We also got jobless claims data from the department of labor, which reported 287K claims this week, just a tad above the 284K forecast and previous week’s reading. In terms of a trend, this data set is in a good direction, and is one aspect of the labor market that has shown consistent recovery. Now we just need wage growth.

The market is now used to seeing jobless claims below 300K now. If we start to get a string of above 300K readings, then we have a problem.

Jobless Claims Since 2009:
jobless claims

(click to enlarge; source: forexfactory)

Today’s data, especially the GDP reading should be slightly positive for the USD. However, after yesterday’s run-up, the greenback seems to be “exhausted”. It made an initial push after the GDP data, but then retreated, signaling a near-term bearish correction.

USD/JPY 1H Chart 10/30
usdjpy 1h chart 10/30

(click to enlarge)

Support Levels for a Near-term Bearish Correction
The 108.70 level might be the first near-term support pivot. But if price fails to pop back above 109, the next support might be in the 108.35-40 area, which is where the 50-hour SMA and a previous common resistance reside. We should expect buyers in this area if we believe USD/JPY is in bullish continuation.

108.00 might be the last line of defense for the bullish continuation argument. A break below 108.00 would completely reverse the FOMC-reaction and suggests a bearish correction with the 105.19 October-low back in sight.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.