Euro rises, US jobless claims drop

• US unemployment claims drop below 200K
• ECB’s Lagarde expresses concern over oil inflation

The euro has bounced back on Thursday, erasing the losses from a day earlier. In the North American session, EUR/USD is trading at 1.0573, up 0.36%.

The Middle East is back in the headlines as Israel and Hamas are engaged in fierce fighting. The market reaction has been muted, as investors haven’t snapped up the safe-haven US dollar. Still, there is growing concern that oil prices could top $100 if the conflict widens.

ECB President Lagarde had a closed meeting this week with eurozone financial ministers, according to a report in Bloomberg. Lagarde noted the risk of higher oil prices would affect Europe as well as the US. If oil prices jump higher, it will complicate the ECB’s efforts to push inflation back down to the 2% target.

US unemployment claims drop, Philly manufacturing improves

In the US, unemployment claims for the week of October 14^th sizzled at 198,000. This was lower than the previous week’s release of 211,000 (revised) and lower than the consensus estimate of 212,000. The US labour market has been showing signs of softening as the Federal Reserve’s rate hikes continue to filter through the economy and dampen economic growth.

The manufacturing sector has been struggling throughout the major economies, and US exceptionalism hasn’t translated into strong manufacturing numbers. Earlier today, the Philadelphia Fed Manufacturing Index improved to -9 in October, up from -13.5 in September but missing the market consensus of -6.4. The index has managed only one gain over the past 13 months.

The markets are always interested in what Fed members have to say, hoping for some insights into Fed rate policy. A host of FOMC members will deliver remarks today, highlighted by a speech from Fed Chair Powell at an event in New York City.

Today’s lineup has added significance as the Fed will enter a blackout period ahead of the meeting on November 1st. The sharp rise in US Treasuries has led to some Fed members saying that inflation could fall without further hikes, and investors will be watching to see if that dovish message is repeated today by Powell and his colleagues.

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EUR/USD Technical

• EUR/USD tested resistance at 1.0548 earlier. Above, there is resistance at 1.0600
• 1.0456 and 1.0404 are providing support

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