USA: there’s no shortage of jobless claims, only of jobs – Market Analysis

USA: there’s no shortage of jobless claims, only of jobs – Market Analysis

The pandemic throws the US job market into mayhem, even more bad news expected

The US Dollar continued its path to the upside against all currencies despite the bad data of jobless claims published this Thursday with a weekly increase of 6.6 Million, a colossal figure never seen before.

The non-farm payroll figure published this Friday is usually one of the most followed by market participants; a drop of 100k is expected, but if we stick to the jobless-claim data, the number may be much higher, and the unemployment rate with an expected 3.8% could also surprise on the upside.

Typically, a worse-than-expected non-farm payroll figure hurts the US Dollar, but this time it is most likely that this relationship will not occur. The enormous growth of jobless-claims has not prevented the Dollar from strengthening.

The USD

The financing needs of USD by emerging countries, such as the case of Brazil, with USD/BRL reaching historical highs and the highest interest rates in the short term, are the market-drivers that support the North American currency. The causes have more to do with financial flows than with economic fundamentals.


The strength of the Dollar has pushed EUR/USD down to the levels indicated in yesterday's analysis. A close below 1.0833 paves the way for further losses at 1.0750, which is quite likely and which most market analysts agree on given the weakness of the Euro.

This weakness of the single currency has dragged the EUR/GBP pair down to levels close to the theoretical objective of the descending triangle pattern that was triggered in the last week of March, in a very pronounced downtrend that in the short term has led to EUR/GBP at oversold levels.

This movement of sales of Euros and purchase of Pounds, in all probability, has supported the Sterling Pound against other currencies. GBP/USD has remained at the high of its price of the last days in a lateral movement despite the general strength of the Dollar and the fact that EUR/USD, with which it has a high direct correlation in the short term, lost more than two figures.


There is also no fundamental reason to explain this strength of the Pound, so the general feeling of the market is that Cable (GBP/USD) will lose positions in the coming days. It is necessary to drill the support at 1.2300 to pave the way to 1.2143, next price concentration area.

The energy market

But the great movement in the market was provided by Crude Oil. In a session of extremely high volatility with an exceptional price range, BrentOil jumped to the upside in a matter of seconds with a rise of $9; an upwards move that corrected down to the area around $29.80.

The reason for this unusual upward move was a tweet from President Trump. He had spoken with Russia and Saudi Arabia about agreeing to cut production by 10 to 15 million barrels a day. Later, a White House official reported that there was nothing firm in this regard. At the moment, there is only one proposal from Saudi Arabia for an OPEC + meeting, which is intended to be attended by countries such as Mexico, the United States, and Canada to agree on a cut in production for all countries.

The uncertainty has been created in the market, and we will have to wait until the end of the week or the beginning of the next to have any news about it. If this proposal is not successful, Crude Oil will continue to fall amid a market with a drop in demand of more than 50% and with minimum storage capacity worldwide.



Sources: tradingview.com

By: Miguel A. Rodriguez Ruiz

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