Volatile date makes jobless rate hard to pin down

Share Markets:

Share markets saw significant declines overnight as concerns over European economic growth were intensified by poor data out of Germany.

ECB Chairman, Mario Draghi acknowledged overnight that the nascent European recovery has lost momentum.

The recent strength of the US dollar is also having an impact on the foreign earnings of US companies.

The Dow fell 2.0% as did the S&P500. In Europe, the FTSE100 fell 0.8% but the Dax rose 0.1% supported by the weaker euro.

Interest Rates: 

Despite the weakness in share markets, US bond yields ended the session with little change and, at 2.31%, remain close to two year lows.

German 10 year yields remain below 1%. In Australia, long term bond yields fell 6 basis points to 3.30%.

San Francisco Fed President John Williams, said overnight that he expects the U.S. central bank to starting lifting interest rates from their current near-zero level in the middle of next year.

Foreign Exchange:

The US dollar index lifted resulting in the AUD coming off it highs for the day.

A weaker European economy, the possibility of lower rates in Europe plus the prospect of a modest hike in US rates during 2015 all helped to push the USD up against the other major currencies overnight.

Commodities:

Oil prices fell substantially on the stronger USD, solid supply, firm inventories and slow growth in Europe.

Copper was also firmer and gold rose for a fourth successive day.

Australia:

Volatile and significantly revised employment data has been extremely difficult to interpret.

The ABS reported that jobs declined 29.7k in September after a revised 32.1k increase in August. It will be some months before we obtain a clear read on employment statistics.

The unemployment rate now stands at 6.1% in September. Leading indicators continue to point to an improving labour market and a moderate pace of job gains.

China:

No data released

Europe:

ECB Chairman Draghi, speaking in Washington, acknowledged that the Eurozone economy was losing momentum but otherwise stuck to the script: inflation will gradually rise towards 2%, and rates will stay low for a long period.

German exports plunged 5.8% in August, their steepest fall since the 2009 recession, following similar weakness in orders and industrial production.

The data added to concerns about the German economy's ability to keep driving the Eurozone in the months ahead.

Japan:

Machine orders rose 4.7% in August, the third consecutive monthly gain. It provides a positive sign of recovery from recent tax-induced slump.

However, the annual pace remained in contraction at -3.3%.

United Kingdom:

The Bank of England kept its key policy rate on hold at 0.5%.

The only data overnight today was the RICS house price indicator which showed a net balance of 30% of surveyors assessing prices as higher, down from the recent peak of 57% in March.

United States: 

US initial jobless claims fell 1k to 287k, for the lowest 4 week trend in eight years. The US is currently seeing the lowest pace of layoffs this century so far.



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