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The U.S. Unemployment Claims report spells more uncertainty – Market Overview

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Miguel A. Rodriguez
Miguel A. Rodriguez
05 November 2022
The jobless claims figures published yesterday added another element of concern in the market regarding the speed in achieving the full employment objectives that the Federal Reserve set.

The data registered a rise in requests for unemployment benefits to 861k from the expected 765k.

With prospects for a slowdown in job creation, investors are raising concerns about expectations of an inflationary surge as the Federal Reserve has committed to keeping interest rates low for as long as it takes to achieve its full employment goal.

This uncertainty is growing stronger among investors and is being reflected in the stock markets.

Wall Street in trouble?

The North American indices are in a situation of an impasse with a tug of war in the process of a slight downward correction.

After the earnings release season is over, only the announcement of the fiscal stimulus package's approval proposed by Biden appears to be a potential driver for the markets. But in this case, it would also be necessary to assess the inflationary repercussions that this measure would have and, above all, the evolution of the yields of long-term American treasury bonds continue to gradually gain territory with a 10-year bond currently trading above 1.30%.

From a technical point of view, USA500 evolves in what could be a reversal pattern that would only be confirmed if it closes (on the 4h chart) below the 3883 area with a potential target at the levels of 3806.

The EUR/USD pair analyzed.

Despite the notable upturn in the yields of the long-term benchmarks of the North American treasury bonds with which the U.S. dollar has a positive correlation, the North American currency is currently experiencing a notable setback against almost all of its major counterparts.

In its price against the euro, the EUR/USD pair has again been unable to continue its downward movement, following its downward break from the 1.2065 level.

The pair has experienced a movement without clear direction since last February 10, trading around 1.2120-30 on average, without the market participants deciding on a continued trend.

The main factor influencing the recovery of the pair today has been the publication of the German manufacturing PMI data for February, with a more than remarkable recovery to 60.6 from an expected 56.5.

The pair needs to break out of the confinement zone between 1.2065 and 1.2170 with the determination to define a more evident trend movement.

Sources: Bloomberg, ForexLive.com.

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.