Forex News
- Initial Jobless Claims went up to 199K vs. the previous week.
- Continuing Jobless Claims dropped to 1.710M.
According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance increased to 199K for the week ending October 10. The latest print came in a tad below initial estimates (200K) and was higher than the previous week’s 198K (revised from 197K).
Additionally, the 4-week moving average went up by 0.25K to 198.50K vs. the previous week’s revised prints (198.25K).
The report also indicated that Continuing Jobless Claims shrunk by 4K to 1.710M for the week ending October 3.
Market reaction
The Greenback fades Wednesday’s advance, motivating the US Dollar Index (DXY) to trade with modest losses in the vicinity of the 102.00 zone, briefly slipping back to multi-day lows, just to recover some ground afterwards.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Producer inflation in the United States (US), as measured by the change in the Producer Price Index, climbed to 6.3% in September from 5.6% in August. This print surpassed the market expectation of 5.3% by a wide margin.
Other details of the publication showed that the PPI rose 1.3% on a monthly basis, compared to analysts' estimate of 0.5%.
PPI ex Food & Energy increased by 0.7% and 5% on a monthly and yearly basis, respectively. Both of these prints came in above experts' forecasts.
Market reaction to US producer inflation
The US Dollar (USD) Index gathers recovery momentum following the hot producer inflation prints and erases its daily losses. At the time of press, the USD Index was still down 0.3% on the day at 102.22.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.39% | -0.38% | -0.17% | -0.16% | 0.97% | -0.06% | -0.49% | |
| EUR | 0.39% | 0.00% | 0.16% | 0.19% | 1.38% | 0.31% | -0.11% | |
| GBP | 0.38% | -0.00% | 0.17% | 0.19% | 1.35% | 0.31% | -0.14% | |
| JPY | 0.17% | -0.16% | -0.17% | 0.02% | 1.18% | 0.11% | -0.32% | |
| CAD | 0.16% | -0.19% | -0.19% | -0.02% | 1.14% | 0.11% | -0.34% | |
| AUD | -0.97% | -1.38% | -1.35% | -1.18% | -1.14% | -1.02% | -1.47% | |
| NZD | 0.06% | -0.31% | -0.31% | -0.11% | -0.11% | 1.02% | -0.46% | |
| CHF | 0.49% | 0.11% | 0.14% | 0.32% | 0.34% | 1.47% | 0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
ING’s Warren Patterson highlights that European natural gas (TTF) prices have reached their highest level since December 2022 as Persian Gulf LNG flows remain down about 80% year-on-year. He expects Asia and Europe to keep competing for spot cargoes, with low European storage and forced German buying supporting prices. ING now forecasts TTF to average EUR73/MWh over the 26/27 winter before an aggressive sell-off from 2Q27.
European gas prices and LNG outlook
"European natural gas prices have traded at their highest level since December 2022, with supply concerns growing as the region heads into the heating season. Unfortunately for the natural gas market, we have not seen a similar recovery in LNG flows from the Persian Gulf as we have with oil. Therefore, LNG flows from the region remain down about 80% year-on-year."
"The market is increasingly accepting that Persian Gulf LNG could remain largely absent from global markets for much of the Northern Hemisphere winter. This means Asia and Europe will continue competing for spot cargoes throughout the winter, keeping prices well supported and leaving the market vulnerable to further spikes."
"European gas storage remains a concern, at just under 75% full, well below the five-year average of 89%. Low storage has seen the German government instruct state-owned SEFE to buy and store an additional 8TWh of natural gas by 15 December. The prospect of essentially forced buying provides further support to the market."
"With little sign of an imminent recovery in Persian Gulf LNG supply, weather will be crucial this winter, and there is growing expectation that Europe will experience a winter of milder temperatures due to El Niño, which would provide some relief to the market. However, it is not a strong relationship, and El Niño does not guarantee milder temperatures."
"We now expect TTF to average EUR73/MWh over the 26/27 winter, up from a previous forecast of EUR65/MWh. The market will likely be very volatile over this period, given the lower starting point for gas storage. Prices are then expected to sell off aggressively from 2Q27 as Persian Gulf supply normalises, and we see a further ramp-up in US LNG export capacity."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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