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Dollar Strengthens Over U.S. Unemployment Claims: Market Watch

Dollar Strengthens Over U.S. Unemployment Claims: Market Watch

The dollar strengthens on positive U.S. unemployment claims and central bank updates, shaping global trading dynamics.

Asia Session Recap:

Today’s Asia session saw notable market reactions following the latest U.S. unemployment claims report, which indicated a drop to 238,000 for the week ending June 15, 2024. This figure represents a decrease from last week’s 243,000 and a significant 9.85% decline from last year, signaling potential stability in the U.S. job market. This positive economic data boosted investor confidence, strengthened the U.S. dollar, and positively impacted Asian stock markets, particularly in export-driven economies.

Impact on Europe and U.S. Sessions:

The upbeat U.S. unemployment claims report will continue bolstering investor confidence in European and U.S. sessions. The U.S. dollar will likely remain strong, promoting a risk-on sentiment that could lead to bullish trading behavior, increased trading volumes, and positive momentum in stock markets. Investors anticipate that sectors with significant exposure to the U.S. market or sensitivity to exports will benefit the most.

Dollar Index (DXY) and Flash Manufacturing PMI:

Today’s Flash Manufacturing PMI, scheduled for 1:45 PM GMT, is a key U.S. dollar (DXY) event. The PMI is a leading indicator of economic health, with a reading above 50 indicating expansion. Today’s forecast is 50.9, suggesting continued growth in the manufacturing sector. A stronger-than-expected PMI could further bolster the dollar, reflecting economic stability.

Central Bank Updates

Federal Reserve:

  • The Federal Funds Rate remains unchanged at 5.25%-5.50% for the seventh consecutive meeting.
  • The Committee aims for maximum employment and 2% inflation in the long run, with balanced risks to these goals.
  • Inflation has eased but remains elevated, with modest progress towards the 2% target.
  • The Fed will continue reducing its securities holdings and reassess policy based on incoming data.
  • Next meeting: 30-31 July 2024.

Market Bias for the Next 24 Hours:

  • USD: Medium Bearish
  • Gold (XAU): Medium Bullish
  • AUD: Weak Bullish
  • NZD: Medium Bearish
  • JPY: Weak Bullish
  • EUR: Medium Bullish
  • CHF: Weak Bullish
  • GBP: Weak Bullish
  • CAD: Weak Bearish
  • Oil: Weak Bearish

Dollar Strengthens Over U.S. Unemployment Claims: Market Watch

Gold (XAU):

Gold prices are sensitive to today’s Flash Manufacturing PMI data. A stronger PMI could strengthen the dollar and put downward pressure on gold prices. Conversely, a weaker PMI could boost gold prices as investors seek safer assets.

Australian Dollar (AUD):

Trading around 0.6655, the AUD has support at 0.6623 and resistance at 0.6707. The Reserve Bank of Australia (RBA) kept the cash rate unchanged at 4.35%, with inflation expected to moderate over the next few years.

New Zealand Dollar (NZD):

The NZD traded around 0.6116, with support at 0.6085 and resistance at 0.6140. The Reserve Bank of New Zealand (RBNZ) maintained the OCR at 5.50%, emphasizing restrictive inflation control policies.

Japanese Yen (JPY):

The JPY traded around 158.97, with support at 158.20 and resistance at 160.22. The Bank of Japan (BOJ) continues its QQE with Yield Curve Control, with revised inflation and GDP forecasts for 2024.

Euro (EUR):

The key PMIs from France and Germany may affect the EUR. The Manufacturing and Services PMI shows a slight decrease, indicating modest growth. The ECB recently lowered interest rates by 25 basis points, aiming for a 2% inflation target.

Swiss Franc (CHF):

The CHF traded around 0.8908, with support at 0.8837 and resistance at 0.8954. The Swiss National Bank (SNB) lowered its policy rate to 1.50% in March, with inflation expected to remain stable.

British Pound (GBP):

PMI data for Manufacturing and Services are crucial for the GBP. The BoE maintained its Bank Rate at 5.25%, with inflation expected to return to target soon.

Canadian Dollar (CAD):

Expectations are slight growth in Core Retail Sales data and a slight decline in overall Retail Sales. Positive data could strengthen the CAD, while weaker data may pressure it. The Bank of Canada recently reduced its target rate to 4.75%.

Oil

Oil traded around 81.83, with support at 80.93 and resistance at 83.00. The market remains cautious, with a weak bearish bias for the next 24 hours.

Today’s economic data and central bank updates will influence various markets and currencies, with investors closely monitoring developments to navigate their trading strategies.

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