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Forex pairs in this Article » USD/JPY
Talking Points:

- +66K increase in Initial Claims sparks intial push into Yen, then back into US Dollar.

- Highest Initial Claims since March.

- FX markets dismiss the data due to irregularities, headlines on debt ceiling.

Weekly labor market data continued its streak of volatile, seemingly unpredictable prints today with the headline figure jumping by +66K to 374K, the highest level since March. As expected, there were a number of disclaimers with the data that led to it being so volatile. For one, 15K of the increase is due to the government shutdown. Second, half of the entire increase is from California, where new reporting systems are still glitch. Essentially, take the headline reported figures with a grain of salt.

Here’s the data:

- Initial Jobless Claims (OCT 5): 374K versus 311K expected, from 308K

- Continuing Claims (SEP 28): 2905K versus 2863K expected, from 2921K (revised lower from 2925K).

While the US Dollar initially slipped on the figures, the skewed data was quickly overshadowed by commentary emanating from both Japanese and US policy officials. Bank of Japan Governor Haruhiko Kuroda was on the newswires trumpeting the success of ‘Abenomics’ and the BoJ’s ultra-loose monetary policy, going as far as to reaffirm that the BoJ will keep long-term interest rates contained for the foreseeable future.

On the US side, Secretary of the Treasury Jack Lew was testifying to Congress about the dangers of passing the debt ceiling. Saying that several lawmakers had miscalculated their understanding about the potential impact of a US default, Secretary Lew urged Congressional leaders to raise the debt limit. Amid the commentary, reports emerged that Republican leaders were considering a six-week extension to the debt limit.

The aggregate impact of these data and headlines has been a stronger USDJPY in the early hours of North American trading on Thursday.

Read more: Dollar Lifted on FOMC, Fiscal Hope

USDJPY 1-minute Chart: October 10, 2013

USDJPY_Volatile_After_Claims_-_Fiscal_Headlines_Overshadow_Data_body_Picture_1.png, USD/JPY Volatile After Claims Jump to 374K - Fiscal Headlines EruptCharts Created using Marketscopeprepared by Christopher Vecchio

Following the data, the USDJPY rallied from ¥97.77 to as high as 98.15, and has since maintained most of its gains after a brief dip back to 98.01. The pair had traded as low as 97.60 on the initial response to the weak claims figures.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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