Current Risks for Developed Economies
Oil prices are rising while the US government is on the verge of shutting down. How will it affect the market?
USD: fighting through
Positive dynamic
There is definitely a positive dynamic in the labor market based on the figures announced by the labor authorities in the US this Thursday.
5.2mln people filing for unemployment benefits is certainly better than 6.6mln and 6.8mln as it was it the previous two weeks respectively. However, the figure was still slightly above the expected 5.1mln.
Reaction
How did the USD react? Relatively indifferently across the board, although a certain weakness is visible with USD/JPY as in the chart below.
Generally, the USD has stopped its advanced against other currencies leading the main currency pairs into a temporary consolidation to digest the incoming data. In the larger scheme, it is unlikely, however, that the investors will move away from demanding more US dollars to hedge against the virus damage.
For the USD/JPY specifically, it trades currenly at 107.46 testing the support of 100-MA at 107.38. In fact, the currency pair performance is now contained between the latter and teh resistance of 200-MA at 107.68. Crossing either of these will serve as a confirmation of further direction for this currency pair.
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