Yen Rebounds As Swiss Franc Strengthens in Calm Markets

Amid better-than-expected jobless claims data, the dollar falls against the Swiss Franc and the yen. Today’s markets are in a state of consolidation as the dollar, on the other hand, is stuck in a range against other major currencies. Commodity currencies are digesting short-term gains, but losses have been minimal thus far. The euro is trading in a narrow range against the pound, but it is losing ground against the Swiss franc.

As of the week of October 16, the number of first-time jobless claims in the United States fell by -6k to 290k, better than the expected 298k. This is also the lowest level since March 14, 2020. The 4-week moving average of the first claim fell -15,000 to 320,000, which is the lowest level since March 14, 2020.

In the week ending October 9, the number of continuous claims fell by -122,000 to 2.481 million, the lowest level since March 14, 2020. The 4-week moving average of continuing claims for benefits fell -85 thousand to 2.656 million, the lowest level since March 21, 2020.

In the October Philadelphia Federal Manufacturing Business Outlook Survey, the current general activity diffusion index fell from 30.7 to 23.8, lower than the expected 26.0.

Judging from some details, the current shipment index remains unchanged at 30.0. New orders increased by 15 points to 30.8. The employment index rose from 26.3 to 30.7. The price paid index rose 3 points to 70.3. The current price received index fell -2 to 51.1. Price indicators remain high.

Yen Rebounds, Dragging USD/JPY to 112.00 and EUR/JPY to 131.00

The possibility of a minor yen rebound is becoming more apparent. EUR/JPY is extended, which should impact USD/JPY, however, the level at 112 appears to be a strong support level.

Yen weakness is expected to prevail in the medium term, there is potential for a tactical reversal as front-end receivers appear to be more appealing in our opinion. EUR/JPY has reached a stalemate at 133, close below its cyclical high of 134.

Given the overall stance on the ECB and the preference for the EUR to remain weak, a retracement to 131 appears likely. This would also correspond to a 50% retracement of the highs and lows since June. This should help push USD/JPY down, albeit level 112 should be a good level of support.