17 September 2013
MARKET UPDATE by Forextime
What can only be called a slight mishap occurred last week in the US, when unemployment claims dropped to a six year low of 292K, bewildering analysts nationwide who expected the figure to stay the same or even increase slightly. Though the news were first received with excitement, it soon came to light that the shockingly low figure was a result of a technical issue experienced in two US states which were in the process of upgrading their computer systems and omitted a significant portion of the new claims which had come through. The disappointment upon realization of the mistake was coupled with disappointment in the retail sales figures for August, which rose only by 0.2%, falling short of the 0.5% predictions. The weak increase was the lowest in four months and an unequivocal indication that economic growth is not exactly moving at a fast pace right now. Likewise, the Reuters/Michigan Consumer Sentiment Index fell to 76.8 in September, the lowest figure since April and a result of increasing concerns about high interest rates and their effects on the housing market. The discouraging data is part of a greater negative outlook in the US, which sees the following year as a particularly difficult one in terms of the housing sector. The key fundamental news for the current week in the US include the Core CPI, out on the 17th and predicted at 0.1%, and on the 19th the US Jobless Claims which are predicted at 323K and the existing home sales which are expected at 5.27M.
In the UK, encouragement arrived in the form of the August Claimant Count Change, which revealed that the number of unemployed people fell by 32.6K in August, a much better figure than the forecast 22K. The overall vibe in the UK is positive, as the country continues to climb the steps of economic recovery at a steady pace; nonetheless, the Bank of England has no intentions of changing the 0.5% interest rate until unemployment hits 7%. The UK awaits the CPI y/y Change this week on September 17th at 2.7% and the MPC Asset Purchase facility votes on the 18th, expected 0-0-9.
Japan’s Consumer Confidence for the month of August waned for the third month in a row according to data released on Monday September 9th, hitting 43 from 43.6 in July. Economists had hoped for an improvement but were gravely let down by the August figures which were the lowest since December 2012. Growth in Japan is staggering on a general level, with the overall outlook amongst households being pessimistic and job prospects for the next year looking gloomy. This week, Japan holds its breath for Bank of Japan Governor Kuroda’s speech on the 20th.