– Both Initial and Continuing Jobless Claims move towards cycle lows.
– Price pressures not abating as quickly as previously thought, core prices edge higher.
– EURUSD slides back under $ 1.1400.
In what may largely be viewed as a nice set of surprises for the US Dollar today, this morning’s weekly jobless claims figures and the September US Consumer Price Index report have provided a bullish spark for the greenback. Both Initial and Continuing Jobless Claims have moved towards cycle lows (in fact, the monthly average for initial claims dropped to its lowest level since December 1973). Despite what was the worst jobs report of 2015, the weekly claims figures continue to suggest that the US labor market remains tight; these figures are part of the bedrock of the argument that the Federal Reserve should raise rates sooner rather later (with later now coming in as March 2016).
Elsewhere, the September US CPI report proved resilient, despite recent concerns that the next bout of disinflation is washing across the globe. In sum, price pressures in the United States remain muted, but they’re not fading as precipitously as markets previously anticipated. While it’s unlikely that the data feeds into the narrative that the Fed missed the boat by not raising rates in September, it will at least provide a somewhat-hawkish counterargument to recent economic trends.
Here’s the data that’s helping lift the US Dollar from its lowest aggregate levels since the end of August (via the USDOLLAR Index):
– USD Initial Jobless Claims (OCT 10): 255K versus 270K expected, from 262K.
– USD Continuing Jobless Claims (OCT 3): 2158K versus 2200K expected, from 2208K.
– USD Consumer Price Index (SEP): -0.2% as expected unch (m/m).
– USD Consumer Price Index (SEP): 0.0% versus -0.1% expected, from +0.2% (y/y).
– USD CPI Core (SEP): +0.2% versus +0.1% expected, from +0.1% (m/m).
– USD CPI Core (SEP): +1.9% versus +1.8% expected, from +1.9% (y/y).
EURUSD 1-minute Chart: October 15, 2015
Following the data, reflecting the market’s stance that the data was an improvement over expectations, EURUSD dropped from $ 1.1443 to as low as $ 1.1370. At the time this report was written, EURUSD was trading at $ 1.1378. Similar price action was observed across the USDOLLAR Index components, with USDJPY rallying from ¥118.18 to as high as ¥118.74, and was last quoted at ¥118.60.
— Written by Christopher Vecchio, Currency Strategist
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