Forex markets are extremely volatile, but all eyes will be on today’s weekly Jobless Claims, reports Adam Button.

The British pound Sterling (GBP/USD) went on a wild ride Wednesday in another sign of domestic worries and a market that isn't functioning properly.

The pound continues to confound. Cable took a run at 1.2000 early in London trade but fell just short and from there it was slammed down to 1.1640 over five hours. In another twist, it then grinded back to 1.1900 after London went home. There's no explaining the intricacies of that move. Some of the late day strength was on general U.S. dollar weakness, but the overall move was chaotic and a sign of a skittish market at best, and a malfunctioning market at worst.

Ashraf says to bear in mind EURGBP dynamics for understanding GBPUSD, especially the recurring 0.93 resistance, acting to support GBPUSD.

The UK Treasury said it will unveil new measures for self-employed people Wednesday and local virus experts were upbeat about the ability of hospitals to cope with the virus but more pictures of packed trains don't bode well.

The broader theme in the market was also confusion. Overall moves were smaller in all markets with a modest risk-on tone but all the moves lacked conviction.

Cable Chaotic, Claims Coming, 1929 Analog - Tweet Gold Oil Mar 25 2020 (Chart 2)

In another quirk, the U.S. dollar, Aussie dollar and Japanese yen were entirely unchanged against one another. The Canadian dollar, meanwhile, gained 2% against all three in part because of a $100 billion stimulus package from Canada and a climb in oil.

Another thing we have to consider for CAD is yield. The Bank of Canada remains at 0.75% while all other major central banks are at least 50 basis points lower. U.S. bill rates out to three months went negative Wednesday while Canadian June paper pays 0.62%. At least for domestic safety-seeking investors, that might be some incentive to bring money home.

Looking ahead, all eyes will be on the U.S. weekly jobless claims number on Thursday. The consensus is 1.5 million claims compared to 281,000 last week. The all-time record of 695K will almost certainly be broken and economist estimates range up to 4 million. Even a number in the 2-3 million range might be seen as 'good' news because some states are showing 20-40x more claims than normal. If there's a miss on the downside, it may simply because some states aren't able to process the benefits – there are widespread reports of outages.

Given all the quirks, it will be easy enough to explain away any number but either way the data will be a test of market sentiment. From there, traders will begin to position for weekend risks.

Adam Button is co-owner and managing director of ForexLive.com and a contributor at AshrafLaidi.com. You can see Ashraf’s daily analysis at www.AshrafLaidi.com and sign up for the Premium Insights. Ashraf's Tweet on indices here.