Market news

1 October 2015

American focus: the US dollar weakened

The US dollar fell against most major currencies against the background of the data on applications for unemployment benefits and business activity in the US manufacturing sector. US Department of Labor said the number of Americans who first applied for unemployment benefits, increased moderately in the last week, but remained near the level, indicating an improvement in the labor market.

According to the report, in the week ended Sept. 26, the number of initial applications for unemployment benefits rose by 10,000 (seasonally adjusted) and reached 277 000. Economists had expected 270,000 new claims. The figure for the previous week has not been revised. It is worth emphasizing the number of calls remained below the psychological threshold of 300,000 already the 30th week in a row, which is the longest series in more than 40 years. Also, the Labor Department said that there were no special factors influencing the latest weekly data.

Meanwhile, it became known that the moving average for 4 weeks, which smooths the volatile weekly data, fell by 1000 - up to 270 750. Meanwhile, the number of people who continue to receive unemployment benefits fell by 53,000 to 2.191 million . for the week ended September 19. Recall data on re-treatment come with a week delay.

In addition, the report published by the Institute for Supply Management (ISM), showed that in September, activity in the US manufacturing sector deteriorated sharply, with the average exceeded the forecasts of experts.

The PMI index for the US manufacturing in September was 50.2 points versus 51.1 points in August. The latter value was the lowest since July 2013. It was expected that this figure will drop to 50.6 points. Recall index is the result of a survey of about 400 companies from 60 sectors across the United States, including agriculture, mining, construction, transport sector, communications, wholesale and retail companies. The value of the index ISM, greater than 50, is generally regarded as an indicator of the growth of industrial activity, and less than 50, respectively, of falling.

The report also reported that the rate of new orders fell in September to 50.1 from 51.7 previously, while the sub-index of production - to 51.8 from 53.6. Unfilled orders fell to 41.5 from 46.5 in July. The employment index fell from 51.2 to 50.5, while export orders component remained at 46.5. Meanwhile, the index of inventories amounted to 48.5, as and August, and the price index dropped to 38.0 from 39.0.

The pound rose against the dollar, supported by data on business activity. As it became known, the British manufacturing sector showed another decline in activity in September, albeit slight. Meanwhile, manufacturers unexpectedly reduced its staff, which was recorded for the first time in more than two years. Experts point out that recent data support calls for the Bank of England to raise interest rates until production improves. According to Markit, the September index of manufacturing activity fell to 51.5 PMI compared with 51.6 in August. Despite the fact that the index remained above 50, it is close to the minimum of two years, which had been recorded in June. Economists had expected the index to fall to 51.3 points. It also became known that the prices paid by producers of raw materials and energy, fell in September at the fastest pace in more than 16 years, suggesting that producer prices are unlikely to rise in the near future. New export orders rose, albeit slightly, for the first time in six months, while production growth reached its highest level since March. Meanwhile, the employment index fell below 50 for the first time since April of 2013. "UK manufacturing sector remained weak in the third quarter, stunned the triple combination of a sharp slowdown in consumer spending, weak business investment and the stagnation of the inflow of export orders," - said the expert Markit Rob Dobson. - Reduction of jobs sends a signal that manufacturers are becoming more careful about future situations that may lead to further expand the scale of decline in production in some companies in the coming months. "

Investors also await the release of the report on non-farm employment in the United States on Friday. The Fed's closely watching these data when making decisions regarding the timing of raising short-term interest rates. The Fed's decision to leave interest rates unchanged at the end of September meeting fueled concerns about slowing global economic growth. Economists predict that the number of jobs in September grew by 203,000 and the unemployment rate remained at 5.1%. Regarding this indicator there is a rule of thumb: increase of 200 000 per month is equivalent to the GDP growth by 3.0%.

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