U.S. unemployment claims fall, business activity edges higher, and the dollar index weakens as markets prepare for key economic data releases today.
The U.S. session on Thursday saw notable economic data releases that influenced market movements. Unemployment claims dropped from 242,000 to 227,000, below the expected 243,000, signaling that the effects of recent hurricane disruptions in the Gulf of Mexico may be easing. This decline in jobless claims indicates a resilient labor market, with the four-week average now at 239,000.
Additionally, the U.S. Composite PMI rose marginally from 54.0 to 54.3 in October, indicating moderate growth in business activity. The service sector remained the primary driver of this expansion while manufacturing output contracted for a third consecutive month. Notably, the rise in selling prices slowed, registering the smallest increase since May 2020, signaling a potential easing in inflationary pressures.
The U.S. dollar index (DXY) started the day strong in the currency markets, hovering around 104.20 following these data releases. However, as selling pressure mounted overnight, the index dipped towards 104.00 by the end of the session, indicating that dollar bulls took a breather after hitting a high of 104.57 earlier in the week.
U.S. Unemployment Claims Fall, PMI Shows Business Growth
Asia Session Preview: Focus on Tokyo CPI and USD/JPY
As markets transitioned to the Asian session, the Japanese yen came under pressure following the release of Tokyo’s Core Consumer Price Index (CPI), which showed a decline from 2.0% to 1.8% year-on-year in October. Although this was slightly above the forecast of 1.7%, it marked the lowest reading since April. The softer inflation reading has fueled speculation that the Bank of Japan may hold off on additional rate hikes. As a result, USD/JPY climbed above the 152.00 level as Asian markets opened.
With Japan’s inflation cooling, the yen could remain under pressure, particularly if the U.S. dollar sustains its strength amid mixed economic signals from other major markets. Market participants will be closely watching the yen’s movements, especially as the Bank of Japan’s policy stance may come into sharper focus at the end of the month.
Key Economic Indicators and Market Outlook
- Durable Goods Orders: The market awaits data on U.S. durable goods orders, scheduled for release later today. Following a strong 9.8% jump in July and a flat reading in August, September is forecast to see a 1.1% decline. A sharper-than-expected drop could add to concerns about the ongoing weakness in the U.S. manufacturing sector, potentially weighing on the dollar and providing support for gold and other safe-haven assets.
- Oil Prices: Oil prices remained volatile, with West Texas Intermediate (WTI) crude stabilizing near $70.50 per barrel after rebounding from a recent low of $69.73. The persistent uncertainty in global energy markets, compounded by geopolitical risks, could keep oil prices fluctuating.
- Gold Outlook: Gold prices could see upward momentum if today’s durable goods orders data indicates a deeper contraction in U.S. manufacturing. This could trigger a weaker dollar, further supporting gold as a safe-haven asset.
Looking Ahead: Central Bank Meetings
Markets are already looking ahead to several central bank meetings in early November. The Federal Reserve’s next meeting on November 6-7 will be closely watched, especially given recent labor market data and ongoing inflation trends. The Bank of Japan’s meeting on October 31 and the Reserve Bank of Australia’s meeting on November 5 will also provide important signals for global markets.
The overall market bias remains cautious as investors digest a mixed bag of economic data and brace for more volatility across currencies, commodities, and equities in the coming days.
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