Jobless Claims in U.S. in Past Month Drop to Eight Year Low

Fewer Americans filed applications for unemployment insurance benefits over the past month than at any time in more than eight years, signaling employers are hanging on to workers as demand improves.

The four weeks average of jobless claims, considered a less volatile measure than the weekly figure, dropped to 297,250, the lowest since April 2006, from 300,750 the prior week.

Claims in the period ended July 26 climbed to 302,000, in line with the median forecast of economists surveyed by Bloomberg, from a revised 279,000 the prior week that was the lowest since 2000.

Federal Reserve officials yesterday continued to pare monthly asset purchases as the job market strengthens and the threat of disinflation diminishes. Nonetheless, policy makers said the labor market still has plenty of room for improvement, even after a drop in unemployment.

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Euro Area Inflation Seen Sticking Low

When the European Central Bank unleashed a stimulus barrage in June, it cautioned that the economy would take some time to respond. Data due this week may test its patience. The inflation rate remained at 0.5 percent for a third month in July, according to estimation.

The unemployment rate remain unchanged at 11.6 percent in June, a separate survey shows. That may fuel policy makers’ concern that annual price gains will become entrenched at a fraction of the ECB’s goal of just under 2 percent, and increase calls for further action.

The ECB unveiled a range of measures including a negative deposit rate and targeted long-term loans last month. While the package has helped push the average yield on bonds from Europe’s most-indebted nations to a record low and bolstered manufacturing and services in a vote of confidence, it has yet to show its impact on prices, growth and lending, as geopolitical tensions threaten to undermine the recovery.

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Gold dropped below $1,300.00

Gold fell for a third day in London, reaching a one week low, as the outlook for an improving U.S. economy and stronger dollar reduced demand for a haven. The Standard & Poor’s 500 index rose to a record yesterday and earnings of companies including Facebook Inc. topped estimates. The dollar was little changed after reaching a five-week high versus a basket of 10 major currencies. 

On the other hand, Gold fell to the lowest level in a week as a rally in equities damped demand for an alternative investment amid concern that physical consumption is faltering. Data yesterday showed gold consumption in China, which surpassed India as the largest user last year, fell 19 percent in the first half of 2014. The metal isn’t likely to get support from Indian demand as import restrictions remain unchanged. 

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Weak Euro coincides with ECB expectations

Euro slid to eight month lows against the dollar on Tuesday after data revealed consumer price inflation in the U.S. met expectations in June, which sent investors betting the Federal Reserve may raise interest rates sooner in 2015 than later, especially if the labor market continues to improve.

On Tuesday, the pair dropped below 1.3500, decisively breaking below 38.2% Fibonacci Retracement level to test a very important support near 1.3480 zone. Sustained trading below this support area has the potential to continue exerting pressure on the pair initially towards an intermediate support near 1.3430 level. 

The pair in the near term might continue depreciating towards 1.3350 support level. Meanwhile, any bounce back from this support region now seems to confront with an immediate resistance near 1.3520 area, which if conquered could possibly boost the pair back towards 1.3600 horizontal resistance area.

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Gold traded near three months low

Gold traded near the lowest price in more than three weeks after Federal Reserve Chair Janet Yellen said benchmark rates could increase sooner than expected if inflation and the job market pick up faster than anticipated, even as stimulus is still needed. Bullion slid 3.3 percent in the previous two days, the biggest two-day drop this year. Yellen will testify to lawmakers in Washington for a second day today. Gold dropped 28% in 2013 on expectations the Fed will scale back stimulus. Prices rebounded 8 percent this year as policy makers had pledged to keep interest rates low after bond buying ends and as unrest in the Middle East and Ukraine spurred demand for a haven. Gold for immediate delivery added 0.3% to $1,297.71 an ounce. It fell to $1,292.26 yesterday, the lowest since June 19. Gold for August delivery was little changed at $1,298.30 on the Comex in New York.

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Gold headed for the biggest decline in almost seven months

Gold headed for the biggest decline in almost seven months as Portuguese banking concerns eased and equities advanced, diminishing demand for haven assets. Portuguese 10-year government bonds were set for the biggest two-day advance in a month on speculation that Portugal would contain financial woes at one of its banking groups. The drop comes after gold capped the longest run of weekly gains since 2011, partly as missed payments on notes by a parent company of Portugal’s second-biggest bank renewed concern that Europe hasn’t resolved its debt crisis. EU spokesman Simon O’Connor said July 11 that the country has taken steps to shore up its financial system. Goldman Sachs Group Inc.’s Jeffrey Currie reiterated his outlook for lower bullion prices as confidence increases in the economic recovery and inflation remains tame. 

Gold_futures for August delivery fell 2.2% to $1,307.50 an ounce. A close at that price will make the biggest loss for a most-active contract since December 19.

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Gold Heads for Longest Weekly Rally Since March

Gold traded near the highest in almost four months, heading for the longest run of weekly gains since March, as concerns about Europe’s economy and the Middle East boosted haven demand. Palladium was near a 13-year high. Gold rallied as much as 1.3 percent yesterday after a company linked to Portugal’s second-largest bank missed debt payments, re-igniting concern about Europe’s sovereign-debt crisis. Banco Espirito Santo SA said today it has exposure of 1.18 billion euros ($1.6 billion) to companies of Grupo Espirito Santo. Israel called up 33K reserve soldiers, intensifying its response to Hamas rocket attacks from Gaza. Bullion for immediate delivery was little changed at $1,335.59 an ounce after rising as much as 0.2% to $1,338.99 an ounce.

The metal rallied to $1,345.17 yesterday, the highest price since March 19, and is heading for a sixth weekly climb. Gold for August delivery traded at $1,336.40 an ounce on the Comex in New York on volumes that were 33% below the 100-day average for this time of the day.

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WTI Crude Heads for Record-Long Slump as Supplies Expand

West Texas Intermediate crude headed for a record-long slump as government data showed an expansion in supplies where the oil is stored, and demand for gasoline weakened. Brent, Europe’s benchmark, was little changed in London. Futures declined as much as 0.7% in New York. A lower closing price would be the 10th in a row, marking the longest retreat since the contracts began trading in 1983, New York Mercantile Exchange data show. Crude stockpiles rose the most since January at Cushing, Oklahoma. Gasoline inventories increased and consumption fell, according to Energy Information Administration figures.

OPEC predicted that demand for its crude will decline in 2015 to the lowest in six years. WTI for August delivery dropped as much as 74 cents to $101.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $101.96. The contract slid $1.11 to $102.29 yesterday, the lowest close since May 16. The volume of all futures traded was about 20% above the 100-day average for the time of day. Crude inventories at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, climbed by 447K barrels to 20.9 million. Supplies nationwide dropped by 2.4 million barrels to 382.6 million.

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Crude oil drop after the EIA data

West Texas Intermediate crude fell for a ninth day, the longest stretch of decreases since 2009, after supplies rose at Cushing, Oklahoma, the contract’s delivery point. Brent slipped to a one-month low amid signs Libyan oil exports will gain. Cushing stockpiles rose by 447 Million barrels، barrels to 20.9 million last week, #Energy Information Administration data showed. Total inventories dropped 2.37 million barrels to 382.6 million, in line with the 2.5 million-barrel U.S. supply drop projected. Libya plans to gradually boost exports to avoid disrupting the market, said Samir Kamal, the nation’s governor to the Organization of Petroleum Exporting Countries. WTI for August delivery dropped 86 cents, or 0.8 percent, to $102.54 a barrel. on the New York Mercantile Exchange. It traded at $102.59 before the release of the report. Futures touched $102.40, the lowest level since June 6. Prices have risen 4.2%this year.

Gasoline stockpiles rose 579K barrels to 214.3 million. A 400K barrel decline was projected, according to the estimate. Iraq’s south, home to more than three-quarters of its crude output, remained unaffected by fighting between government forces and insurgents from a breakaway al-Qaeda group known as the Islamic State. The country is the second-largest producer in OPEC.

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Pound Weakens After Hitting 7-Year High

The pound weakened versus the dollar on speculation a rally that took Britain’s currency to a five-year high may fade as the Federal Reserve moves toward raising interest rates. Sterling also declined after data showed bullish bets as measured by the Commodity Futures Trading Commission had climbed to the highest level since 2007, reducing the potential for fresh buying impetus. Predictions said the U.K. central bank will leave its benchmark rate at a record-low 0.5% on July 10. The Fed is winding down its asset purchase program. Speculation that the Bank of England will be the first major central bank to increase rates helped push the pound 11.3 percent stronger in the past year, the best performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro rose 1.5 percent, while the dollar fell 4.9%. Sterling slipped 0.1% to $1.7140 after rising to $1.7180 on July 4, the highest level since October 2008. It rose 0.7% last week, completing the longest run of weekly gains since the period ended September 21, 2012.

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Euro Drops on Bets ECB Policy Will Weaken Currency

ECB officials led by President Mario Draghi will leave monetary policy unchanged tomorrow, according to analysts in a Bloomberg News survey. The Frankfurt-based central bank unveiled unprecedented stimulus measures at its previous meeting on June 5, including negative deposit rates that tend to weaken a currency. Markit Economics said its construction index, based on a survey of purchasing managers, increased to 62.6 from 60 in May. That’s the highest since February and compares with the forecast for a decline to 59.8. The index has been above the 50 level that indicates expansion for more than a year. An index of housing activity increased to 66.6 in June from 62.7 in May, Markit said. That’s the highest since the gauge rose to 67.3 in January, which was the strongest reading in more than a decade. Commercial building grew the fastest in five months. The euro fell versus the dollar for a second day as investors prepare for speeches from Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi. The 18-nation currency fell after French Prime Minister Manuel Valls said in an interview with Les Echos newspaper that the ECB needs to go further to weaken euro. Policy makers meet in Frankfurt tomorrow.

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