US JOBLESS CLAIMS FALLS TO LOWEST LEVEL SINCE 1973

The Japanese Yen rose slightly against the US dollar following positive economic data. Data from the government showed that the unemployment rate in the country fell to 2.5%. This was better than the 2.6% which analysts were expecting. However, other data released today was not overly positive as industrial production rose to 4.1% against the expected 5.1%. In Tokyo, inflation rose at an annualized rate of 1.0% compared to the expected 1.3%.

Yesterday, data from the American government showed that the number of jobless claims fell to the lowest level since 1973. The jobless claims reduced by 12K to 215K. Traders were expecting the jobless claims to be 230K. Continuing claims rose by 35K to 1.87 million while the four-week average of initial claims fell to 224K. The data shows that more American companies are experiencing a shortage of skilled labor which is making it difficult for them to lay off people.

The euro strengthened slightly against the dollar following the release of Italian and French inflation data. The two countries are the second and third largest in the European Union. French CPI rose by 1.0% compared to the expected 0.8% while the HICP rose by 1.7% compared to the expected 1.5%. The Italian CPI and HICP rose by 0.9% and 1.1% respectively. This follows the release of better than expected CPI numbers from Germany.

USD/JPY

The USD/JPY pair is currently trading at 106.2 level. This is down from the weekly high of 107. The decline today came as government data showed that the unemployment rate was falling. There is a likelihood that the pair can continue moving lower as it tries to move past the previous gains. Traders should now watch out for the 106 level which provides important support.

EUR/USD

On Thursday last week, the pair started moving higher. It moved from a low of 1.2284 and reached a high of 1.2476 on Tuesday this week. After that, it started moving lower reaching a low of 1.2284 yesterday. The decline this week was because of the ongoing tensions on trade after it emerged that France and Germany were divided about how to deal with Trump. The pair will continue being a bit volatile as traders wait for a solid direction about trade.

XAU/USD

It has been a tough week for gold, whose price has fallen from a high of $1356 to a weekly low of $1321. YTD, gold has risen by about 2% while the dollar index has declined by almost 3%. Gold is now in consolidation mode as shown by the Bollinger Bands pattern below. As tensions continue to rise on trade, and as treasury yields and cryptocurrencies ease, there is a likelihood that gold could recover and continue to move higher.