Job Recruitment Slowdown vs. Stable Unemployment: Which Way for US Labor Market?

On Friday (October 4th), according to the Department of Labor data released on Thursday, the number of Americans filing for unemployment benefits increased slightly but remained at a level that reflects limited layoffs. For the week ending September 28th, the initial claims in the United States increased by 6,000 to 225,000. A Bloomberg survey of economists had a median forecast of 221,000 applications. The four-week moving average of initial claims fell to 224,250, the lowest level since June 1st. The number of continuing unemployment claims remained almost unchanged from the previous week, at 1.83 million.

Despite a slowdown in hiring and an increase in the unemployment rate this year, the number of weekly benefit claims has remained low, primarily because employers have largely retained their existing staff. So far this year, the number of layoffs announced by U.S. employers has hardly changed compared to the same period last year, with most layoffs coming from the technology sector, which typically offers generous severance packages, meaning these workers are less likely to apply for unemployment insurance. The U.S. Dollar Index rose to 101.90; non-U.S. currencies retreated, with the Australian dollar reaching 0.6840 against the U.S. dollar, the euro fell to around 1.1030 against the U.S. dollar, and the offshore renminbi reached 7.05. Spot gold rebounded to near $2,662, and spot silver came to $32.20. Crude oil rose to near $74.30.

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Fundamentally: As investors bet on the European Central Bank accelerating the pace of rate cuts, the euro is poised to record its longest losing streak since April. The euro is set to fall for a fifth consecutive day. The euro has lost more than 1% against the U.S. dollar so far this week, approaching a key support level, and a break below that level could open the door for further declines. Currently, currency markets are pricing in about 180 basis points of rate cuts by the Federal Reserve by the end of 2025, while the European Central Bank is expected to cut rates by about 170 basis points, a much smaller difference than two weeks ago.

Technically: The euro against the U.S. dollar rebounded at the H4 level but remains below the 48-day moving average. Additionally, the MACD lines and volume bars have crossed above the zero axis. Considering the ongoing contraction in industry, the Eurozone economy is likely to grow at a barely perceptible rate in the third quarter.

Resistance and Support Levels:

First Resistance Level: 1.1090 First Support Level: 1.0980

Second Resistance Level: 1.1140 Second Support Level: 1.0930Fundamentals: Following the Bank of England Governor Bailey's hint that the central bank might adopt a more aggressive approach to lowering interest rates, the British pound experienced its largest decline in over a year. For months, it has been perceived that the UK would lag behind other countries in terms of loose monetary policy. According to data from the Commodity Futures Trading Commission, investors are betting on a bullish pound to capitalize on this interest rate differential, with hedge funds' bets hovering near their highest levels since 2018.

Technical Analysis: The British pound against the US dollar has plummeted significantly on the H4 timeframe, moving away from the 48-day moving average that separates bulls from bears. Moreover, the MACD lines and volume bars have begun to converge below the zero axis. According to the head of foreign exchange strategy at Credit Agricole, the best days of the pound's rally may be behind us.

Resistance and Support Levels:

First Resistance Level: 1.3190 First Support Level: 1.3080

Second Resistance Level: 1.3240 Second Support Level: 1.3030

Fundamentals: Japan's new Prime Minister, Fumio Kishida, stated that the Japanese economy is not yet prepared to handle interest rate hikes by the central bank, leading to a significant drop in the yen to a level not seen in over a month. Concurrently, strong US employment data have driven up Treasury yields, further diminishing expectations for substantial rate cuts by the Federal Reserve. Under the dual economic policy shock, the yen faces immense pressure, and market uncertainty regarding the Bank of Japan's policies has intensified.

Technical Analysis: The US dollar against the Japanese yen has retreated on the H4 timeframe after encountering resistance and is now trading above the 48-day moving average that separates bulls from bears. Additionally, the MACD volume bars and lines have further decreased above the zero axis. The Bank of Japan's governor has also made similar cautious remarks. This series of statements has led the market to believe that the Bank of Japan will not raise interest rates in the near term, contributing to the yen's largest single-day drop in two years.Resistance and Support Levels:

First Resistance Level: 147.40 First Support Level: 145.70

Second Resistance Level: 148.20 Second Support Level: 144.80

Fundamentals: The latest data indicates that Australia's trade surplus in August was 5.644 billion AUD, which exceeded expectations. This trade figure may not support the expectation of a rate cut by the Reserve Bank of Australia (RBA) in the fourth quarter of 2024. Trade accounts for over 50% of Australia's GDP, and 20% of its workforce is engaged in trade-related jobs. While Australia's trade conditions are crucial, the RBA's focus remains on the labor market, consumption, and inflation.

Technical Analysis: The Australian dollar against the US dollar has experienced a downtrend rebound on the H4 timeframe, but it is still trading below the 48-day moving average. Additionally, the MACD lines and volume bars are converging below the zero axis. The market's fundamental forecast is that the RBA will cut rates for the first time in February, but there is a high possibility of an earlier rate cut.

Resistance and Support Levels:

First Resistance Level: 0.6890 First Support Level: 0.6800

Second Resistance Level: 0.6930 Second Support Level: 0.6760Fundamentals: One of the main factors weighing on gold recently has been the strong performance of the US dollar. As the market's expectations for a Federal Reserve rate cut in November cool down, the US Dollar Index continues to rise, diminishing the appeal of gold, which is priced in dollars. Data shows that the market now estimates the probability of the Federal Reserve making a significant rate cut at the next meeting has dropped from nearly 60% last week to 34% today. This change reflects a recovery in investor confidence in the US economy and the possibility of the Federal Reserve maintaining a tight monetary policy.

Technical Analysis: Gold is rebounding at the H4 level and is trading near the 48-day moving average. Additionally, the MACD lines and volume bars are once again contracting near the zero axis. In the current market environment, expectations for the Federal Reserve's monetary policy and the performance of US economic data remain the core factors affecting gold prices.

Resistance and Support Levels:

First Resistance Level: 2674.00 First Support Level: 2638.00

Second Resistance Level: 2692.00 Second Support Level: 2610.00

Fundamentals: Although conflicts in the Middle East remain a risk factor, OPEC's spare production capacity has eased the fear premium in the oil market. OPEC+ has a significant amount of spare production capacity, estimated at 5.86 million barrels per day, mainly concentrated in Saudi Arabia and the United Arab Emirates. If Israel targets Iran's oil infrastructure, this buffer can cover the entire loss of Iranian supply, and this possibility still exists as tensions escalate.Technical Analysis: Crude oil at the H4 level has risen again and moved away from the 48-day bull-bear line. Additionally, the MACD lines and volume bars have started to contract above the zero axis. OPEC's ability to increase production provides a buffer for global supply, limiting the possibility of a significant rise in oil prices.

Resistance and Support Levels:

First Resistance Level: 77.00 First Support Level: 72.00

Second Resistance Level: 79.00 Second Support Level: 70.00