U.S. Unemployment Claims – Any Christmas Surprises?
At 8:30 AM ET on December 24th, the Department of Labor releases its weekly Unemployment Claims figure.
This figure represents the number of people who filed for unemployment insurance during the previous week. It only includes those who file for the first time. Since employment and spending are closely linked, this number is believed to be the earliest indicator of economic health. Trends can sometimes be noticed within a series of releases, a downtrend being bullish for the currency in this case. In addition, if the actual number is less than expected it is considered bullish for the currency.
As you know the EUR/USD has just pulled off a huge bounce with the extreme rate cuts and the USD not appearing so much as shelter from the worldwide economic storm as previously. The pair has dropped back below the upper Bollinger Band, from being technically overextended for 5 full trading sessions.
As you can see from the daily chart, the EUR/USD has slipped into very tight trading range over the last 3 sessions, however each day closing slightly higher. I use Bollinger Bands extensively in my analysis; they have become very wide, and are getting wider, due to the sharp run up. This seems to indicate that the present holiday low volatility is the calm before the storm. It will be interesting to see if the Unemployment Claims surprises enough from the 554k expected figure and add a bit of spice to the EUR/USD pair on Christmas Eve day.
Best wishes!
David Goodboy is Vice President of Business Development for a New York City based multi-strategy fund.