US jobless claims hold near multi-decade lows

Friday, August 14, 2015

US data released yesterday continued to point towards an incoming rates rise as initial jobless claims for the week ending August 8th continued to hold near a four decade low. New jobless claims came in at 274K last week, four thousand more than market participants had expected and 5,000 higher than the previous week’s figure. However, taking a four week moving average of the figure which helps smooth out the week to week volatility initial claims declined to their lowest levels in over fifteen years. Firm retails sales also bolstered the case for a potential September rates rise with retails sales ex-auto increasing 0.4% m/m while the previous month’s reading was revised up from -0.2% to 0.4% m/m.

Despite the bullish data US benchmark equity indices ended the session in negative territory as Chinese concerns continued to weigh heavy on investor sentiment. Both the S&P 500 and DJIA had pushed higher earlier on in the day, following the relief rally in Asia and Europe, however, investors adopted a more cautious tone towards the end of the session with both indices giving back the majority of the day’s gains. The dollar also faced some resistance, particularly from the euro and pound sterling yesterday as attempts to recover some of Wednesday’s steep losses. The dollar index attempted to regain territory towards 96.805, however, early gains were once again trimmed and the index ended the session modestly higher at 96.445.

A busy end to the week for economic data will keep investors fully engaged right up until the closing bell. Q2 German GDP figures have already kicked off proceedings with preliminary data indicating a 0.4% q/q expansion, slightly below the 0.5% q/q expansion forecast by market participants but still stronger than the first quarter, which saw Germany’s economy expand by 0.3% q/q. Coming up shortly will be eurozone second quarter GDP data which analysts expect to come in broadly in line with Q1 at 0.4% q/q while inflation figures will offer additional insight into the health of the eurozone’s economy and impact of the ECB’s QE programme. Over in the US the afternoon session will be peppered with PPI final demand data as well as industrial production growth for July while the University of Michigan sentiment index for August will round up the week.   

DXY holds onto support at 50 day, 100 day MA

DXY Curncy DOLLAR INDEX SPOT 2015 08 14 08 02 42

Initial jobless claims hold near recent low

INJCJC Index US Initial Jobless 2015 08 14 07 51 09

Events for today

0700

DE

Q2

GDP

0930

UK

Jun

Construction Output

1000

EZ

Q2

GDP

1000

EZ

Jul

CPI 

1330

US

Jul

PPI Final Demand

1415

US

Jul

Industrial Output

1455

US

Aug

Michigan Survey (Preliminary)

Topics: GDP, DXY, Unemployment
More from: Kash Kamal