The number of Americans filing for unemployment benefits dropped to its lowest level in 43 years, official figures revealed on Thursday.According to the US Department of Labor, initial jobless claims fell 5,000 to a seasonally adjusted 249,000 in the week ending October 1, compared to the preceding week's reading of 254,000, while market analysts anticipated a slight rise to 255,000 in the reported period. It was the 83rd consecutive week of initial claims remaining below the 300,000 level, the longest streak since 1973. Furthermore, the four-moving average of claims, considered a better measure of labor market trends, declined 2,500 to 253,000 last week, the lowest level since December of 1973. The data also showed the number of continuing claims decreased 6,000 to 2.058 million in the week ended September 24, while its four-week moving average declined 21,000 to 2.095 million.
Meanwhile, analysts expect Friday's NFP report to announce 171,000 new jobs for September and the unemployment rate to remain unchanged at 4.9%. Immediately after the release of initial jobless claims, the US Dollar rose against other major currencies, trading at 1.1179 against the Euro, 1.2641 against the British Pound and 103.89 against the Japanese Yen, while its Index advanced to 96.44.
UK Manufacturing Production, US NFP and Unemployment Rate
GBP/USD dives on harsh ‘Brexit' expectations
The Cable failed to remain above the 1.27 level yesterday, having slumped to 1.26, finding support only at the monthly S2. Nevertheless, early during the Asian today all supports crumbled, causing the Pound to drop to 1.1950 dollars. The sell-off was triggered by growing fears that ‘Brexit' will have a much harder impact on the UK's economy than first anticipated. Eventually the pair managed to climb back above 1.24, but it is uncertain now whether the monthly S3 will hold through the day. Today's US NFP data could help the Pound even reclaim 1.25 if the British currency refrains from falling deeper down until then.
Daily chart
Hourly chart
Traders remain undecided
There are 62% of traders with a positive outlook towards the Sterling, compared to 65% yesterday. Meanwhile, the share of buy orders edged down from 52 to 44% over the past 24 hours.
A similar situation is observed elsewhere. For example, 60% of positions open at OANDA are currently long. This is more than the share of shorts (40%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is somewhat bullish, with 57% of traders being long and 43% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect no major changes
By the end of the next three months traders expect the Cable to be more or less at the same level where it is now. While the current price is around 1.30, the average forecast for January 07 is 1.3043. Interestingly enough, however, the 1.30-1.32 interval is not the most popular one, having only 13% of the votes. Most of the votes are concentrated in 1.28-1.30 (19%) intervals. Furthermore, 50% all survey participants believe the Cable is to climb over 1.30.