The number of Americans filing for unemployment aid advanced less than expected last week, official figures showed on Thursday. According to the Labor Department, initial claims rose 10,000 to 247,000 during the week ending January 7. This marked the 97th consecutive week that claims remained below the 300,000 level, the longest streak since 1973. Thursday's report also showed that continuous claims dropped 29,000 to 2.09 million in the last week of 2016. Separately, the Labor Department reported that import prices climbed 0.4% in December, following the previous month's 0.2% decline. The increase was mainly driven by rising petroleum prices that jumped 7.9% during the reported period. On an annual basis, import prices increased 1.8%, the biggest rise since March 2012, after climbing 0.1% year-over-year in November.
Meanwhile, excluding petroleum, prices dropped 0.2% month-over-month in December, compared to the prior month's unchanged reading. The stronger US Dollar was the major reason behind the December decline. Over the last year, the Greenback appreciated greatly against the currencies of the US main trading partners, advancing 4.4%. Though it experienced the largest gains in the wake of Donald Trump's election. The major US stock markets ignored today's positive data, following Trump's disappointing press conference.
US Retail Sales and PPI are the main events today
GBP/USD takes another shot at 1.22
The British currency managed to climb over the 1.23 mark for only a short period of time yesterday, ultimately sliding back down and closing trade below 1.22, thus, erasing all this week's gains. In spite of this decline, the Cable still refused to drop below the 1.2150 level, while volatility stretched even lower since Monday. Psychological support here remains strong is likely to cause the GBP/USD to rebound. Consequently, the Sterling has the potential to reclaim the 1.22 mark; however, this implies today's US fundamentals are to disappoint, as they are the main Cable drivers.
Daily chart
Hourly chart
Traders mostly bullish
Traders' sentiment returned to its Monday's level of 71%, down from 73% on Thursday. At the same time, the share of sell orders inched up again, namely from 49 to 54%.
A similar situation is observed elsewhere. For example, 67% of positions open at OANDA are currently long. This is more than the share of shorts (33%), more than sufficient for the sentiment to be called bullish. Similarly, sentiment at Saxo Bank is also bullish, with 64% of traders being long and 36% being short the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders expect the Cable to keep falling
By the end of the next three months traders expect the Cable to fall under the 1.24 major level, as 67% of survey participants believe so. While the current price is around 1.22, the average forecast for April 13 is 1.2204. However, the 1.20-1.22 interval is now the most popular one, having 17% of the votes, while on the second place is the 1.14-1.16 price range, with 15% of poll participants choosing it. Furthermore, the 1.18-1.20 interval was chosen by 13% of the voters.