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Weekly unemployment claims in the USA spiked by over 24,000 as core durable orders rise more than predicted

Apr 25 • Morning Roll Call • 995 Views • No Comments

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shutterstock_92685466After the UK’s CBI business survey report of yesterday suggested that certain optimism data amongst many executives in the UK had risen to a forty year high, all eyes were on the retail sales figures from the CBI which shot up for the fifth successive month. Now focus will turn towards the UK’s retail figures to be published by the UK’s official stats. agency the ONS on Friday and the polling estimate suggests a reading of -0.4% for March which if matched contradicts the CBI’s bullish reports over recent days.

From the USA we received the weekly unemployment claims, which have fallen to a recent low of 297K a fortnight back before being revised upwards. This week the figure spiked back up to the type of tight range figure we’ve become accustomed to over recent years. This week’s reading was 329K, over an eight percent increase on the previous week with the BLS stating that there were no seasonal or other factors responsible for the huge spike.

Good news from the USA came in the form of core durable goods orders which rose more than expected in March. Bookings for goods meant to last at least three years increased 2.6 percent, the biggest gain since November, after rising 2.1 percent in the prior month.

Growth in UK retail sales rebounds CBI

Retail sales grew strongly in the year to April and are expected to grow at an even faster pace next month, according to the CBI’s latest monthly Distributive Trades Survey. The survey of 131 firms showed that sales growth in April improved from March, with sales now having increased year-on-year for the fifth consecutive month. Sales volumes are expected to rise again next month, with expectations for growth at their strongest since December 2010. Among the retail sectors, grocers, footwear & leather and hardware & DIY recorded particularly strong annual sales growth, all seeing a pick-up from March.

US Unemployment Insurance Weekly Claims

In the week ending April 19, the advance figure for season ally adjusted initial claims was 329,000, an increase of 24,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 304,000 to 305,000. The 4 – week moving average was 316,750, an increase of 4,750 from the previous week’s unrevised average of 312,000. There were no special factors impacting this week’s initial claims. The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending April 12, a decrease of 0.1 percent from the previous week’s unrevised rate of 2.1 percent.

Durable Goods Orders in U.S. Rose More Than Forecast in March

Orders placed with American factories for durable goods such as cars and computers rose more than forecast in March, pointing to faster production that will help spur the economy. Bookings for goods meant to last at least three years increased 2.6 percent, the biggest gain since November, after rising 2.1 percent in the prior month, a Commerce Department report showed today in Washington. The median forecast of economists surveyed by Bloomberg called for a 2 percent advance. Orders excluding transportation equipment, which is often volatile, rose by the most in more than a year.

Market overview at 10:00 PM UK time

The DJIA closed flat on the day at 16,501, the SPX closed up 0.17% and the NASDAQ closed up 0.52%. Euro STOXX closed up 0.44%, CAC up 0.64%, DAX up 0.05% and the UK FTSE up 0.42%.

The DJIA equity index future is down 0.12%, SPX future up 0.06% and the NASDAQ is up 1.08%. Euro STOXX future is up 0.19%, DAX future down 0.18% and the CAC future is up 0.42% with the UK FTSE future is up 0.27%.

NYMEX WTI oil was up 0.52% on the day at $101.97 per barrel, NYMEX nat gas finished the day down 0.82% at $4.69 per therm. COMEX gold closed the day up 0.90% at $1292.60 per ounce with silver on COMEX up 1.19% at $19.67 per ounce.

Forex focus

The yen gained a second day, advancing 0.2 percent to 102.32 per dollar mid-afternoon in New York after touching 102.09, the strongest level since April 17th. It added 0.1 percent to 141.48 per euro. The 18-nation shared currency climbed 0.1 percent to $1.3827 after falling 0.2 percent earlier.

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major counterparts, traded at 1,010.97 after touching 1,012.74, the highest since April 8th. New Zealand’s dollar dropped against most of its 16 major peers, reversing initial gains, after the first developed nation to start raising rates this year also boosted its estimate for growth in the year ended March 31st. The kiwi, as the currency is known, fell 0.2 percent to 85.66 U.S. cents after climbing as much as 0.6 percent.

The yen reached the strongest level in a week against the dollar as a flareup in tensions between Russia and Ukraine stoked investor demand for safety. The yen has advanced 2.4 percent this year, the third-best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar fell 0.8 percent and the euro has weakened 0.1 percent.

JPMorgan Chase & Co.’s Group of Seven Volatility Index dropped 20 basis points, or 0.20 percentage point, to 6.27 percent, the lowest level since August 2007. The gauge jumped to a record 26.55 percent in October 2008 shortly after the collapse of Lehman Brothers.

The pound rose 0.1 percent to $1.6805 after appreciating to $1.6842 on April 17th, the strongest level since November 2009. Sterling gained 0.1 percent to 82.26 pence per euro. A measure of the pound’s volatility against the dollar dropped to the lowest level in 16 months even as the currency strengthened to a four-year high last week amid signs the U.K. economy is improving. Implied three-month volatility for the pound versus the dollar fell six basis points, or 0.06 percentage point, to 5.3125 percent late afternoon in London after dropping to 5.285 percent, the lowest since December 2012. The gauge surged to 25.025 in November 2008 during the global financial crisis.

Bonds briefing

The yield on the current seven-year note fell one basis point, or 0.01 percentage point, to 2.28 percent mid-afternoon in New York. The price of the 2.25 percent securities maturing in March 2021 gained 2/32, or 63 cents per $1,000 face amount, to 99 26/32. Benchmark 10-year note yields fell two basis points to 2.68 percent. The yield rose as much as three basis points. Treasuries rose, with seven-year note yields falling to almost the lowest in a week, after the sale of $29 billion of the debt attracted the most demand since 2011 from an investor class that includes foreign central banks.

Fundamental policy decisions and high impact news event for April 25th

Friday sees Tokyo’s core CPI published with the anticipation that the reading will come in at 2.8%. All industries activity from Japan is expected to come in at -0.5%. From the UK we receive the latest data on retail sales, expected to come in at -0.4% for the month. BBA mortgage approvals in the UK are predicted to come in at 48.9K. Flash services PMI for the USA is expected to come in at 56.2 whilst the university of Michigan Consumer sentiment report is expected to deliver a reading of 83.2.

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