U.S. dollar strengthens broadly after upbeat U.S. jobless claims: Jan 30, 2015

Market Review - 29/01/2015 22:48GMT 
 
U.S. dollar strengthens broadly after upbeat U.S. jobless claims

The greenback rose versus other major currencies on Thursday as official data showed the number of people who filed for unemployment assistance in the U.S. last week fell to the lowest level since 2000.

Versus the Japanese yen, despite dollar's retreat from Asian high of 118.09 to 117.58, renewed selling in yen versus other major currencies lent support to usd/jpy and the pair rose to 118.19 ahead of New York open. Later, broad based buying in greenback after the release of upbeat U.S. jobs data pushed price higher in New York morning and price eventually climbed to an intra-day high of 118.50 before easing.

The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending January 24 decreased by 43K to a seasonally adjusted 265K from the previous week's total of 308K. Market had expected U.S. initial jobless claims to decline by 8K to 300K last week. However, in a separate report from the National Association of Realtors, data showed pending home sales index decreased by a seasonally adjusted 3.7% last month, disappointing expectations for a 0.5% gain. Pending home sales in November rose by 0.6%, whose figure was revised down from a previously reported gain of 0.8%. Year-on-year, pending home sales rose at annualized rate of 6.1% in December, below expectations for an increase of 10.9% and following a gain of 4.1% in November.

The single currency swung wildly on Thursday as despite an initial fall to 1.1262 versus U.S. dollar in Asia, renewed cross-buying in euro lifted price to 1.1305 in Asia. Later, although upbeat German unemployment data pushed price higher in Europe and euro hit an intra-day high of 1.1368 in New York morning, renewed broad-based buying in greenback pressured price back down below 1.1300 level to 1.1279 in New York afternoon before recovering.

Germany's Federal Statistics Office said in a report that the number of unemployed people fell by a seasonally adjusted 8K this month, compared to expectations for a drop of 10K. Jobless claims decreased by 25,000 in December, whose figure was revised from a previously reported fall of 27K. In a separate report, data showed that Germany's unemployment dipped to 6.5% in Jan from 6.6% in Dec, in line with expectations.

Cable ratcheted lower after a brief bounce from 1.5130 to 1.5163 in Asia and then tanked to 1.5511 in European morning. Despite subsequent choppy sideways trading ahead of New York open, price fell sharply in New York morning on renewed broad-based strength in greenback, dropping to 1.5018 before stabilising in New York afternoon.

In other news, BoJ's Governor Haruhiko Kuroda says 'prices rising in japan reflecting improvements in corporate revenues, wages; QQE exerting intended effect on economy; Japan prices continue to rise as a trend despite pressure from oil price falls; Japan consumer inflation may fall due to oil price falls, but lower oil costs benefit economy; inflation likely to accelerate in latter half of next fiscal year, hit 2% in period centering fiscal 2015; no change to our monetary policy stance, which is to aim for 2% inflation in roughly two years; what is important is to look not just at prices of individual goods but also medium- to long-term trend of inflation; Japan's output gap has narrowed near zero, companies signalling eagerness to raise wages; no change to factors that determine price trend, including output gap n inflation expectations; have been saying since April 2013 that 2% inflation will be achieved at period centering fiscal 2015; timing of Japan hitting 2% inflation may change somewhat depending on oil price moves.'

Friday will see the release of Japan's Unemployment Rate, All Household Spending, CPI, Industrial output, Construction orders, Housing Starts, Australia's PPI, France's Producer Prices, KOF indicator, Italy's Unemployment Rate, Producer Prices, U.K.'s Gfk Consumer Confidence, Mortgage Approvals, euro zone's Unemployment Rate, Inflation ex Food & Energy, Canada's GDP, U.S. PCE, Chicago PMI, University of Michigan Sentiment.