Tomorrow at 12.30 pm GMT, the US Initial Jobless Claims data for last week will be published, and this could have implications for all USD-pairs, including the GBPUSD. This data piece has become the new barometer by which the coronavirus-induced employment situation the US is now measured. Before now, the last time the US Initial Jobless Claims assumed such market importance was in the years immediately following the global financial crisis.
These are no longer ordinary times. Last week’s US Initial Jobless Claims data showed a record increase in the number of people filing for unemployment benefits for the first time: at least 3,283,000 people. The spike prompted a massive sell-off on the USD, with the GBPUSD gaining nearly 452 pips on the day in response to the news.
Trading the US Initial Jobless Claims Using the GBPUSD
Tomorrow, the market consensus is for 3500K to file for unemployment benefits for the first time. The deviation to work with (consensus – previous number) is 217K.
If the figure is 3717K or more, this could be interpreted as USD-negative, thus providing a buying opportunity for the GBPUSD.
If the data release shows a less-than-expected number of first-time applicants for the unemployment benefits (3066K or less), this would be viewed as USD-positive and could spark a sell-off on the GBPUSD.
The GBPUSD’s daily price action for the past three days of the week has thrown up three Doji candles, all resting on the 1.23695 resistance level. This setup is not surprising, as most traders are sitting on the sidelines and are awaiting this data release and the NFP job numbers on Friday.
A bounce from this support area targets the 15 July and 20 September 2019 highs at 1,25771 in the first instance, with 1.27558 waiting in the wings as the next possible resistance target.
To the downside, the 11 October 2019 and 16 March 2020 lows at 1.22006 could be the next downside target following a breakdown of 1.23695. 1.21210 and 1.20005 remain potential downside targets which would attract sellers of this pair if the news happens to be strongly USD-positive.