Market Analysis

USD: Initial Claims & Philly Fed

With Federal Reserve officials observing the customary blackout period ahead of next week’s FOMC policy meeting, and in the absence if tier one US economic data this week, today’s second-tier data might attract more market attention than is customarily the case. US initial jobless claims (released 1330h UK time) printed last week at 204,000, the lowest level since December 1969. A low initial jobless claims number supports the notion of a strong US labor market, and there’s no compelling reason to expect today’s figure to be market-moving. But traders might wish to bear in mind that Hurricane Florence must have had some impact on businesses in affected areas, which may put upward pressure on initial claims in the next few weeks. The Philadelphia Federal Reserve (Philly Fed) manufacturing index will also be released at 1330h UK time. August saw quite a fall to a 21-month low of 11.9 from July’s 25.7.  Given that US economic data since the last Philly Fed release has been broadly robust, markets might well expect a bounce. For example, Japan’s Nomura Bank expects the index to rebound to 15.0 from 11.9.  Therefore if the Philly Fed data doesn’t rebound from that 11.9 print last month, that might be where the ‘shock’ value is for the currency markets.

by Neal Kimberley, External Currency Analyst