Forex Signals Brief October 19: A Number of FED Members to Speak Today

Yesterday the heavy feeling returned again, as risk sentiment turned negative. The visit of US Vice President Joe Biden in Israel is not alleviating regional tensions, at least not yet, as commodities continue to react to the increased uncertainty. Gold is soaring higher, reaching a four-week high of $1,947 following a strong rise since Asia trade.

Crude Oil also made decent gains yesterday after opening with a gap higher. is the second big winner, with WTI Oil up about 3% at the height to $89 before retreating to $87. Market movements were more measured outside of the commodities domain. Stock markets resumed the decline again, with US futures down 0.7% and European indexes down 0.6%.

This came as Treasury rates moved higher for the third day this week, with 10-year yields rising above to 4.90% after opening around 4.83%. Risk currencies were looking more subdued in the forex market. The pound received a slight bid amid additional evidence of higher UK inflation, before turning bearish as well. The USD also found some bids as sentiment is still supported for the time being by geopolitical tensions higher rates and a stronger US economy.

Today starts with the employment report from Australia. Analysts at Westpac expect the employment change to be 20k (formerly 64.9k), with the unemployment rate remaining stable at 3.7%. According to the researchers, “The choppy profile over the last two months again looks to be partly a reflection of shifting seasonalities around school holidays.”

According to the desk, “businesses have exhibited a surprising capacity to absorb the migration-driven boost in labor supply, though this dynamic will be tested if the larger economy continues to slump… The labor market has passed its peak, although it is not yet loosening significantly.” Westpac predicts that the labor market will remain tight through the end of the year “before a more material degree of easing occurs.”

The US employment report will be released later, with the Jobless Claims rising recently. However, we had a miss in Continuing Claims last week, which tracks continuous unemployment benefits and may be used to gauge how easy people can find another job after being jobless. It may be something or nothing, but it’s certainly worth keeping an eye on. Initial Claims are expected to be 213K this week, up from 209K the previous week, with no consensus on Continuing Claims at the time of writing.