Data and yields continue to support USD

GBPUSD, H1

The dollar moved higher after the slightly higher than expected jobless claims outcome, and much better than expected Philly Fed index print, leaving EURUSD at 1.1797 from 1.1811, Cable rebounded up to 1.3515 from 1.3473 lows earlier and USDJPY is at trend highs of 110.79 from 110.70. Despite this mixed pictures out of the major currency pairs, firmer Treasury yields continue to support the greenback, therefore dollar strength remains as the main theme of the week. Therefore, it is likely to see Pound and Euro retesting day’s low.

US initial jobless claims rose 11k to 222k in the week ended May 12 versus the unchanged reading at 211k in the prior May 5 and April 28 weeks. That knocked the 4-week moving average down to 213.25k from 216k. Continuing claims dropped 87k to 1,707k in the May 5 week after bouncing 34k to 1,794k previously. The initial claims coincide with the BLS survey week and continue to show a very tight labor market.

Meanwhile, US Philly Fed index climbed 11.2 points 34.4 in May, much stronger than expected, after edging up 0.9 points to 23.2 in April. It was 35.5 last May, which was a two-year high. Gains were broad-based. The employment component increased to 30.2 from 27.1, with the workweek at 34.4 from 21.6. New orders surged to 40.6 from 18.4. Prices paid dipped to 52.6 from 56.4, though prices received rose to 36.4 from 29.8. The 6-month business conditions index fell to 38.7 from 40.7, but the employment index improved to 42.8 from 34.6, with new orders rising to 40.3 from 37.2, while prices paid slid to 63.4 from 66.8 and prices received dropped to 33.6 from 47.9. This is a pretty goldilocks report again.

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