US Dollar flat with upbeat US Jobless Claims in balance with downbeat Philadelphia Manufacturing number


  • The US Dollar trades in the green in the aftermath of the weekly US Jobless Claims.
  • Traders hear Fed's Bostic call again for a steady-for-longer outlook. 
  • The US Dollar Index failed to close above the important technical level of 103.40. 

The US Dollar (USD) trades slightly higher in the aftermath of US Jobless Claims numbers that went from 203,000 to 187,000. The upbeat number got overshadowed with another contraction print for the Philadelphia Fed Manufacturing Survey heading from -12.8 to -10.6, where -7 was expected. So some positiveness for the Greenback, though partially with that Philadelphia number dragging a touch. 

On the economic front, all numbers are out of the way, though Atlanta US Federal Reserve member Raphael Bostic is due to speak again this evening near 17:05 GMT. Although he already signalled his stance earlier this morning, his last speech is the second-to-last opportunity to steer markets ahead of the blackout period starting Friday evening. A slight hawkish tilt might fuel some more US Dollar strenght on the back of his comments. 

Daily digest market movers: Iran stirs tensions in the Middle East 

  • Houthi rebels said on Thursday that both the US and UK are now in direct conflict with the Houthi rebels. 
  • Iran has launched attacks on Pakistan locations. Recent numbers reveal as well that Iran has trippled its production for weapons-great Uranium. 
  • Thursday’s events kicked off with comments from Atlanta Federal Reserve President  Raphael Bostic. He said he wants to see more evidence of inflation coming down. Wants to keep higher for longer to avoid having to cut first, and hike afterwards on a monetary policy error.
  • Housing Starts data was released  at 13:30 GMT, together with Jobless Claims:
    • Monthly Housing Starts for December heads from 1.525 million to 1.46 million. 
    • Monthly Building Permits for December went from 1.46 million to 1.495 million. 
    • Initial Jobless Claims went from 203,000 to 187,000.
    • Continuing Jobless Claims went from 1.832 million to 1.806 million. 
    • Philadelphia Fed Manufacturing Survey for January remained nearl unchanged at -10.6, coming from -12.8.
  • The US Treasury will allocate a 4-week bill and a 10-year TIPS near 16:30 GMT and 18:00 GMT. 
  • Equity markets are trying to break the downbeat tone from this week. Asian indexes closed broadly flat, while European equities are trying to tie up with some small gains. US futures are dispersed with the Nasdaq in the green and the Dow Jones in the red. 
  • The CME Group’s FedWatch Tool shows that markets are pricing in a 97.4% chance that the Federal Reserve will keep interest rates unchanged at its January 31 meeting. Around 2.6% expect the first cut already to take place. The more traders reprice cuts to later this year, a small rate hike expectation might come through in the coming days. 
  • The benchmark 10-year US Treasury Note remains steady at 4.11% while the US Dollar Index has retreated a touch. 

US Dollar Index Technical Analysis: Another attempt

The US Dollar Index (DXY) was unable to perform the best scenario to enter in a possible more lengthy period of Greenback strength. Although the rally could still turn into a longer uptrend, the fact that the DXY was unable to have a daily close above both the 55-day and the 200-day Simple Moving Average (SMA) at 103.40means issues ahead. The bulls can still salvage the situation this Thursday or Friday with still a close above the level, and squeeze out the final bearish elements present, before rallying further in the coming days. 

The DXY is still trading near the 55-day and the 200-day Simple Moving Averages (SMA) at 103.39 and 103.45. In case the DXY can get through that area again, look for 104.44 as the first resistance level on the upside, in the form of the 100-day SMA. If that gets scattered as well, nothing will hold the DXY from heading to either 105.88 or 107.20, the high of September.  

Risk of a bull trap is very much a possibility, where US Dollar bulls were caught buying into the Greenback when it broke above both the 55-day and the 200-day SMA in early Wednesday trading. Price action could decline substantially and force US Dollar bulls to sell their position at a loss. This would see the DXY first drop to 102.60, at the ascending trend line from September. Once threading below it, the downturn is open to head to 102.00.

Risk sentiment FAQs

What do the terms"risk-on" and "risk-off" mean when referring to sentiment in financial markets?

In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.

What are the key assets to track to understand risk sentiment dynamics?

Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.

Which currencies strengthen when sentiment is "risk-on"?

The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.

Which currencies strengthen when sentiment is "risk-off"?

The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD fluctuates near 1.0850 as markets assess Fed commentary

EUR/USD fluctuates near 1.0850 as markets assess Fed commentary

EUR/USD trades in a tight range at around 1.0850 on Tuesday. In the absence of high-tier data releases, the cautious market mood helps the USD hold its ground and limits the pair's upside. Meanwhile, investors continue to scrutinize comments from central bank officials.

EUR/USD News

GBP/USD stays in positive territory above 1.2700, awaits fresh catalysts

GBP/USD stays in positive territory above 1.2700, awaits fresh catalysts

GBP/USD struggles to stretch higher above 1.2700 on Tuesday as the mixed action in Wall Street supports the USD. Investors await fresh catalysts, with several Fed officials and BoE Governor Bailey set to speak later in the session. 

GBP/USD News

Gold rebounds to $2,430 as US yields edge lower

Gold rebounds to $2,430 as US yields edge lower

Gold gained traction and climbed to $2,430 area in the American session, turning positive on the day. The pullback in the benchmark 10-year US Treasury bond yield helps XAU/USD stage a rebound following the sharp retreat seen from the all-time high set at the weekly opening at $2,450.

Gold News

Shiba Inu price flashes buy signal, 25% rally likely Premium

Shiba Inu price flashes buy signal, 25% rally likely

Shiba Inu price has flipped bullish to the tune of the crypto market and breached key hurdles, showing signs of a potential rally. Investors looking to accumulate SHIB have a good opportunity to do so before the meme coin shoots up.

Read more

Three fundamentals for the week: UK inflation, Fed minutes and Flash PMIs stand out Premium

Three fundamentals for the week: UK inflation, Fed minutes and Flash PMIs stand out

Sell in May and go away? That market adage seems outdated in the face of new highs for stocks and Gold. Optimism depends on the easing from central banks – and some clues are due this week.

Read more

Forex MAJORS

Cryptocurrencies

Signatures