The participation rate in the labor force also dropped, whereas, employment among college grads declined by 276K, and is worrisome as 2010 graduates compete with the 2009 class. Additionally, the conclusion of the federal home buyer tax credit has lead to a weak housing market, which has guided construction payrolls to the downside.
Yesterday, Monster.com released their employment index in which showed that online help-ads in July fell to 138 from 141 the in June. This reading is of great importance in that it reviews overall employee demand from online recruitment activity, reviewing more than 1500 web sites. Also worth nothing, jobless claims for the week ending July 31th rose 19,000 to 479,000, and the rise in jobless figures suggests the recovery is losing steam.
All in all, the labor market faces major headwinds throughout the rest of the year as the recovery is tested. Employment will remain under pressure on the back of weak consumer and business confidence, while the unemployment rate is forecasted to advance to 10.0 percent over the medium term.
EURUSD Daily Chart
Source: FXCM’s Strategy Trader –Prepared by Michael Wright
Taking a look at the EURUSD, we may continue to see the pair push higher as price action remains confined by the rising channel. Furthermore, the pair has reversed course at the 50.0 percent Fibonacci retracement on the January 12th to June 7th downswing. A clear break above this level will expose the 200-day SMA/61.8 percent Fibo retracement. Indeed, optimism continues to gain momentum in Euro-zone. The ECB held rates are 1.00 percent in August; however, the central bank head appeared more optimistic about the bloc and the passage of the banks stress tests. Mr. Trichet noted that economic activity will be better than expected in September. Meanwhile, in the U.S., Ben Bernanke said that there is “unusual uncertainty” in economic activity, while earlier this week, the Fed Chairman announced that there will be "significant time" before 8.5 million jobs are restored.
Related Articles:Weekly Spotlight: Could Non-Farm Payrolls Fall By 65K?
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical's, Weekly Spotlight, and Forex Trading Weekly Forecast
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