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February 2014 19

Greenback dips after disappointing retail sales and jobless claims figures

Financial Market News - Teletrade All eyes last week were on dollar’s slide against all rival currencies, after the release of disappointing U.S. retail sales report for January and unexpected rise in initial jobless claims the week ended February 8.

Official data from the U.S. Commerce Department published on the economic calendar on Thursday, February 13th, showed a slide in retail sales for the second consecutive month in January. The report indicated that retail sales decreased by a seasonally adjusted 0.4% the previous month, upsetting expectations for a 0.3% rise and seriously questioning the outlook of the U.S. economic recovery. December’s figure was revised down to 0.1% decline from a previously reported 0.2% gain, when winter clothing sales rose. Strong retail sales associate with robust economic growth, while decreasing retail sales show a declining economy, thus directly affecting the market sentiment in a negative way.

The report also indicated that core retail sales, excluding automobile sales, were flat in January, compared to expectations for a 0.1% increase. The corresponding figure in December was revised down to a rise of 0.3% from a formerly documented upsurge of 0.7%. Core sales reflect on the consumer spending element of the U.S. Gross Domestic Product. It is noteworthy that consumer spending accounts for 70% of the overall economic growth.

The median estimate of 86 economists surveyed by Bloomberg News before the release of the official data in Thursday, showed stagnation in U.S. retail sales in January. In anticipation of the report, TeleTrade analysts said that “a probable decline or flat outcome on retail sales report, will provide little motivation for traders to buy the greenback, where this in the short-term will imply little prospective for the currency’s recovery”.

Meanwhile, official data from the U.S. Department of Labor showed that the number of individuals who filed for unemployment assistance in the week ending February 8, increased to 339,000 from the previous week’s figure of 331,000. Economists had anticipated jobless claims to drop by 1,000 to 330,000, so the announced figure came as a shock. The unexpected 8,000 weekly increase fuelled traders’ concerns over the strength of the U.S. labor market.

Euro gained ground

Following the release of the weak data on Thursday, 13, the single currency rose versus the U.S. dollar, with EUR/USD climbing up to 0.65% to 1.3681, rebounding from the previous session’s lows of 1.3561, after the statements of Benoit Coere - ECB member - that the ECB is seriously considering a negative overnight interest rate on deposits.

In Friday 14, however, the single currency peaked to an almost three-week high against the greenback, with EUR/USD gaining 0.08% to 1.3691. The euro found further support after the release of preliminary data reporting rise in Eurozone’s Gross Domestic Product by 0.4 in the last quarter. The report that was published by Eurostat, exceeded forecasts for a 0.2% increase, following a merely 0.1% rise in Q3. Eurostat’s data also indicated that the seasonally-adjusted GDP growth in the Eurozone area was projected to be 0.5% up compared to the last quarter of 2012.

Another report earlier in the day, indicated that the German GDP increased by 0.4% in Q4, above forecasts for a 0.3% increase, while the French GDP rose 0.3% during the same period, with regard to forecasts for a 0.2% rise.

GBP in 33-month high

The sterling edged up to a 33-month high versus the U.S. dollar on Friday, with GBP/USD increasing to 1.6715 during European morning session. The cable strengthened significantly after the Bank of England revised its forecast for the U.K. economy from 2.8% to 3.4% for the current year on Wednesday, 12. The BoE also updated its forward guidance on bank rates, stating it will not increase rates until the spare capacity in the U.K. economy has been fully absorbed, which it is not expected to occur until 2015.

Performance of Other Major Currencies

In the wake of the unexpectedly weak data on Thursday, the USD/JPY hit 101.71, the lowest since February 7. The greenback remained lower on the following day, with USD/JPY reaching 101.85. The yen generally found support against its rival counterparts at the end of the week, as decreases in Asian equities enhanced demand for Japan’s safe currency.

On Friday 14, the U.S. dollar also edged lower versus the Australian and New Zealand dollar, with AUD/USD rising 0.51% to 0.8924 and NZD/USD gaining 0.32% to 0.8368, after the announcement of positive inflation figures from China, as the country is the main trading partner of both Australia and New Zealand. The greenback lowered against the Swiss franc and the Canadian dollar, with USD/CHF falling 0.11% to 0.8926 and USD/CAD dropping 0.20% to 1.0953.

Among weak retail sales and employment numbers, the U.S. dollar index, which records the overall performance of the currency against a basket of six other major currencies, fell 0.18% to 80.21 on Friday, which is the lowest in more than a month.

About TeleTrade – Financial Markets Expert

Founded in 1994, TeleTrade is a truly global brand with over 200 offices in 30 countries, being an acknowledged leader in its field with numerous industry and business awards. TeleTrade-DJ International Consulting Ltd is established in Cyprus and maintains representative offices in most EU countries. It is licensed and regulated by CySec (Cyprus Securities and Exchange Commission) under licence number 158/11 and operates in accordance with MiFID (EU Investment Directive).

  • 20 Jul 2017

    Teletrade held a series of educational events and presentations in Kenya in late June 2017. Public seminars on trading and investment technologies and opportunities have been conducted by Fortune Orianwo, TeleTrade's regional development representative, in Nairobi, Mombasa, Kisumu, Meru and Eldoret, with the purpose to create further and deeper awareness of financial markets, and foster recognition of TeleTrade brand and values in Africa.

  • 05 Jul 2017

    Dear Clients,

    From July 17, 2017, the trading conditions will be changed for all instruments on Standard Accounts: the price will be formed based on market ask and bid prices, with no intermediaries involved. Therefore, all clients holding Standard Accounts will be provided with a floating spread, thus bid and ask prices will be changing independently of each other.

    Also, TeleTrade will increase the degree of precision of quotes for Forex instruments from 2/4 digits to 3/5 digits after decimal point.

  • 03 Jul 2017

    Dear Clients,

    Please be advised that new terms for the Savings Reward Program for TeleTrade's VIP clients will come into effect on July 1, 2017. The amounts of Savings Reward will be as follows:

    • 12% for clients holding the VIP Status;

    • 13% for clients holding the VIP Gold Status;

    • 14% for clients holding the VIP Platinum Status.

    Trading on a trading account will be granted the status 'Active' provided that at least 1 lot is exercised in trading transactions within a month per each $1000 of balances.

  • 26 Jun 2017

    Dear TeleTrade Clients,

    Please note that there will be a change in the trading hours on CFD instruments that will take place on July 3-4, 2017, due to the celebration of Independence Day in the USA.

  • 07 Jun 2017

    Dear Clients,

    Please be advised that on June 12, 2017, the trading sessions in CFD on currency USDRUB will be closed.

    Please keep the above information in mind when planning your trading transactions.

    Also, let us kindly remind you that our Holiday Calendar is available to be viewed on the company's website.

    Kind regards,

    TeleTrade

  • 07 Jun 2017

    TeleTrade is honoured to be awarded “Best Forex Broker Europe 2017” from the Capital Finance International represented by the CFI.co judging panel.

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