THE TAKEAWAY:USD Initial Jobless Claims (AUG 3) > 333K versus 335K expected, from 328K (revised up from 326K) > USDJPY BULLISH
Markets are closely watching US labor data after a tremendous miss in Non-farm Payrolls last week (+162K July actual; +185K Bloomberg News survey expected). This meaningful miss, along with a downward revision in June figures to +188K, caused more caution towards labor market sentiment after earlier optimistic NFP data.
The weekly Initial Jobless Claims data slightly beat Bloomberg News survey expectations, coming in at 333K versus the 335K consensus. However these weekly numbers are volatile so investors often like to take a four-week moving average to smooth out the ridges.
Note the y-axis on the chart above is scaled in thousands and begins at 300K.
The trend in data shown above is certainly optimistic. In fact, the four-week moving average of 335.5K is at its lowest level since November 2007.
However the Initial Jobless Claims does not tell the whole labor market story. The labor force participation rate is at 63.4%, compared to 66.0% in November 2007. Needless to say, numerous variables need to be considered to affirm labor market development. The Fed will need to decide whether the economy is indeed strong enough before it consider tapering asset purchases at the September meeting. Ideally for the Fed, NFPs will be around +200K for several months. Thus additional labor market data will need to be closely watched in coming weeks before any further deliberation can take place.
USDJPY 1-minute Chart: August 8, 2013
Charts Created using Marketscope – prepared by Kevin Jin
The USDJPY is slightly lower after the marginally positive US labor data. The pair is down about -25 pips at the time of writing and even attempted to reach ¥96.00 before turning slightly higher.
--- Written by Kevin Jin, DailyFX Research
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