Initial jobless claims came in at 229K, lower than the expected 249K. Moreover, last week's number was revised downwards from 242K to 225K. This was after Massachusetts amended its prior report to weed out a massive increase in fraud. The series has effectively been moving sideways since February 2023 (green rectangle), a sign of a resilient job market.
In response to the jobless numbers, the US 2-year yield, a proxy for monetary policy, moved higher. The weekly US 2-year yield chart has its green 5-week EMA moving above its orange 10-week EMA (black ellipse). The market is effectively pricing in a more hawkish Fed than it previously anticipated.
The USDOLLAR has a positive correlation coefficient of 53% with the 2-year note. This implies that the higher yield will pull the greenback up with it. In this regard, we note that dollar's green 5-week EMA has converged and is looking to cross above its orange 10-week EMA (red ellipse).
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.