• Weekly initial jobless claims 260k vs 266k exp and 272k prior
  • 3rd time in the past 4 readings this release has beat forecasts
  • EURUSD falls to possible key support at 1.1720

This afternoon is relatively light on the data front with the release of initial jobless claims arguably the stand out. For the 3rd occasion out of the last 4 the weekly employment figures have come in better than expected, with today’s release showing 260k compared to a consensus forecast of 266k and a prior reading of 272k. 

The longer term trend seen since the start of 2015 was blown out of the water early last month after a huge spike higher. The number of claims massively rose due to the damage caused by both Hurricane Harvey and Irma but since then there has been a recovery with this indicator moving back lower once more.  

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 Initial jobless claims have dropped once more this week as the employment indicator continues to recover after spiking last month due to the Hurricanes. Source: XTB Macrobond

 This week’s initial jobless release may garner a little more attention than usual as it comes just a day ahead of the more widely viewed NFP report (preview here). With today’s number beating, the release supports yesterday’s ISM non-manufacturing in showing a higher than forecast result. Wednesday’s ADP employment change was broadly in line with forecasts so there is little here to suggest that tomorrow’s NFP will be any worse than the expected (90k).

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 The EURUSD has fallen to test a potentially key support around 1.1720. Source: xStation

The EURUSD is falling lower today and the pair is close to trading at its lowest level since July. There is a case to be made that the market has broken a rising trendline dating back to April. In addition there could be a head and shoulders reversal formation developing and whilst the second shoulder looks shorter than it would ideally, a break and close below the neckline at 1.1720 could lead to further declines. Should the pattern play out in a textbook manner then a potential target would be 1.1350.