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The Marketplace - 17th October 2014
17/10/2014
A quiet day for the UK in terms of data releases yesterday but Sterling still managed to make gains across the board, more notably against the US Dollar and the Euro. It appeared on paper that the US Dollar should have at least made some inroads against its major counterparts, as unemployment fell to a 14 year low but the reaction from the market yesterday was heavily influenced by news from the Eurozone.
The uncertainty regarding the Greek bailout/lending programme as it comes to a close and the prospect of German Buba President Weidmann Due to deliver a speech this morning titled "The Changing International Monetary System: Outlook for 2014-15" will have had, and will continue to cause major volatility throughout the day.
Quiet again for economic data today but the key speeches from Weidmann and US Fed Chair Yellen later today, could prove to be the calm before the storm as we go into next week.
US Jobless Claims Fall to 14 Year Low
Last week’s jobless claims number fell to a 14 year low, the latest sign of an improving labour market across the pond. Initial claims for unemployment benefits fell by 23,000 to a seasonally adjusted 264,000 in the week ending October 11th that was below the 290,000 claims forecast by economists and the lowest level since the week of April 15, 2000, when it was 259,000.
The report also showed the four-week moving average for initial claims, which smooths out week-to-week volatility, fell 4,250 to 283,500.
The number of people filing continuing claims for unemployment benefits rose 7,000 to 2.4 million for the week ended Oct. 4. Those figures are reported with a one-week lag. The data marked the fifth consecutive week initial claims have been below 300,000, the longest such stretch since 2006. As the economic recovery gains traction, employers are increasingly reluctant to lay off workers.
Mixed Bag for Eurozone Data
The Eurozone trade surplus widened in August as the decline in imports remained larger than the fall in imports, leaving a seasonally adjusted number of EUR 15.8BN, up from 12.7 the month previous. Exports decreased for the third consecutive month in August with shipments down 0.9% following a 0.1% drop in July. Imports declined 3.1% reversing July's 0.6% increase.
Another data from the same agency showed that the Eurozone's final inflation slowed as initially estimated in September to the lowest since late 2009. Inflation fell to 0.3%, in line with flash estimate, from 0.4% in August. This was the lowest since October 2009, when prices fell 0.1%. It has been below the 2% ceiling since February 2013 and monthly inflation was 0.4% in September.
Sterling declined against the Eurozone currency following the release as market attention looks to German President Weidmann’s speech this morning for any reference to quantitative easing being introduced by the ECB at next month’s meeting.
Industrial Production Jumps 1% in September
Industrial production rebounded strongly in September, a sign that a key sector of the US economy held steady ahead of recent market worry over slowing global growth.
Industrial production, which measures the output of manufacturers, utilities and mines, rose 1% in September and may have been boosted by warmer weather, the Federal Reserve said Thursday. It was the largest monthly increase since May 2010 and followed a decline of 0.2% in August, which had initially been reported as a decline of 0.1%.
Capacity utilization rose to 79.3% in September, the highest level since June 2008. Higher capacity use is often a precursor to stronger business spending. That level is still slightly below its long-run average of 80.1%.
Today’s Key Data:
EUR – German Buba President Weidmann Speaks: Due to deliver a speech titled "The Changing International Monetary System: Outlook for 2014-15" at the Official Monetary and Financial Institutions Forum, in Frankfurt. Germany’s importance in the region means that comments from Weidmann are particularly important considering the current economic climate in the Eurozone.
USD – Building Permits: The number of permits issued for privately-owned housing units reached a seasonally adjusted annual rate of 998,000 in August following the revised July rate of 1,057,000. Economists expected a total of 1,040,000. Single-family permits in August reached 626,000, 0.8% below the revised July figure of 631,000. Authorizations of units in buildings with five units or more were at a rate of 343,000 in August. The number of permits is expected to grow to 1.04 million.
USD - Fed Chair Yellen Speaks: Due to speak at the Federal Reserve Bank of Boston's Conference on Inequality of Business Opportunity, in Boston
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