US weekly jobless claims fall; layoffs drop in September
Recent data indicates a favorable trend in the US labor market, with new jobless claims declining and layoffs decreasing over September. This suggests resilience in employment stability, which could potentially bolster the USD amid cautious employer hiring practices. Such metrics are pivotal as they may influence Federal Reserve decisions on interest rates moving forward, particularly in the context of maintaining inflation targets.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). This reflects a cautious yet optimistic sentiment on the US economic outlook as indicated by the latest jobless claims data.
How firms align
Goldman maintains a positive stance towards the USD amid labor market strength, supporting a target of 1.12. In contrast, BofA's bearish position on the USD is underscored by their lower target of 1.04, indicating a divergence in outlook regarding the labor market's impact on currency trends.
What the data shows
Forecast revisions are trending positively for the USD following the labor market's stabilization, aligning with our recent insights on labor demand boosting confidence in economic resilience. For more details, refer to /research/labor-outlook.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Jobless claims dropped, signaling labor market stability.
- 02Cautious hiring may keep upward pressure on the USD.
- 03Watch for Fed announcements that could react to labor market trends.
Market implications
Traders should monitor the USD's performance as tomorrow's payroll data release could be a significant catalyst. Our upward consensus target at 1.075 may be tested as market sentiment evolves.
Risks to this view
A sudden rise in layoffs or a significant increase in unemployment claims could derail this positive outlook, prompting a reevaluation of the USD's strength, particularly ahead of key economic announcements.
Sentiment by currency
USD+EUR JPY GBPComposite USD score: +0.55
Sources & References
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