Summary:

• Weekly initial jobless claims come in at 236k vs 240k exp
• 4-week moving average drops to 242k
• USDIDX adding to recent gains; at 2-week high

With tomorrow marking the last NFP report of the year traders are looking for any indication of strength or weakness in the US labour market and the release this afternoon of the weekly initial jobless claims has provided a mild positive on this front.

 A fall to 236k from 238k previously is suggestive of a marginal improvement in the initial jobless claims figure, with the consensus forecast for a print of 240k. 

As you can see from the graphic above this metric has been consistently low throughout the year with the hurricane-induced spike higher during September quickly subsiding and the prevailing low readings return. Short term fluctuations can be smoothed out a little by using a 4-week moving average rather than just point readings. The 4-week moving average dipped slightly after today’s data falling to 242k after decreasing by around 750.

From a longer term perspective both the point reading and average remain in a fairly well defined downtrend and suggest the unemployment levels in the US are low by historical standards.  

 Both the initial jobless claims and the 4-week average of them remain in a fairly steady downtrend after the latest release. Source: xStation

The US dollar has enjoyed a steady week of gains so far with the buck reacting positively to the Senate passing the tax bill over last weekend. In fact the USD index (USDIDX on xStation) has reached its highest level in 2 weeks today and is approaching a prior resistance level at 94.05.

 The USD index has moved higher today to trade at its highest level in more than 2 weeks. Source: xStation

There are some growing technical signs that the downtrend in the USDIDX may be over with the price finding support on the D1 Ichimoku cloud last week. This has acted as a fairly accurate trend identification tool for the past year with the break above it last September leading to a strong move to the upside and the break below it in March of this year leading to a sustained drop. 

 The USDIDX has found support on the D1 Ichimoku cloud recently and as long as it stays above it then it could rise going forward. Source: xStation