Forex Investment and Currency Trading

Initial jobless claims jumped 30K to 586K in the week ending December 20, above expectations (consensus: 558K). This pushed the four-week moving average up to 558K, the highest since December 1982. According to the Department of Labor, an increase in manufacturing and auto layoffs heavily contributed to the jump in claims. Continuing jobless claims slipped to 4.370mn in the week ending December 13 from 4.387 the prior week. The insured unemployment rate held at a 16-year high of 3.3%.
The continued increase in jobless claims paints a negative picture of the labor market. Market expects another very weak payroll report in December [...]

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Durable goods orders fell 1.0% in November, less of a drop than our and consensus estimates of a 3.0% decline. The report also showed an unexpected rise in core capital goods orders and shipments, and suggests the trend in these categories is somewhat less negative than previous data had suggested.
Overall orders were pushed down by a 37.7% decline in orders of non-defense aircraft and parts. Core capital goods orders increased 4.7% in November after a 6.6% drop in October (revised down from -5.0%); the increase was focused in computers and electronics (5.9%) and machinery (4.1%). Core capital good shipments rose [...]

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Personal consumption fell by a less-than-expected 0.6% in November, following a 1% decline in October. However, the entire decline was due to a sharp drop in inflation (PCE price index fell 1.1%), reflecting plunging gasoline prices and to a lesser extent holiday-related discounting. Real consumption rose 0.6%, the first increase since May. The gain was fairly widespread as real spending on durables, non-durables and services rose by 0.6%, 1.5% and 0.1%, respectively. The upward surprise in real consumption suggests a smaller decline in Q4 real PCE. Even assuming a modest-size decline in spending in December, real consumption now looks likely [...]

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In a historic move, the FOMC announced yesterday that it is going to “establish a target range for the federal funds rate of 0 to 1/4%,” thereby cutting the target rate at least 75bp and acknowledging that in the current environment it has limited control over the effective funds rate.  Even more aggressive was its statement, which shifted the focus of policy to financial market interventions. It indicated specific asset classes that it would support (agency and mortgage debt), but maintained considerable flexibility, saying it would explore the benefits of buying long-dated Treasury securities. The statement also mentioned the TALF, [...]

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