The US dollar weakened against other major currencies after data showed that the number of initial applications for unemployment benefits fell last week, less than expected, while concerns over the outlook for the Chinese economy once again contributed to the strengthening of demand for traditional safe-haven currency such as the yen and Swiss franc.
US Department of Labor said the number of Americans who first applied for unemployment benefits decreased last week, while pointing to a gradual improvement in the labor market.
According to the report, in the week ended Jan. 2, the number of initial applications for unemployment benefits fell by 10,000, to a level of 277,000 (seasonally adjusted). Economists, however, expected to decline to 275 000. The figures for the previous week, I have not been revised. The Labor Department said that there were no special factors influencing the latest weekly data.
The dollar came under pressure after the minutes of the December Fed meeting showed that some of the officials expressed concern that inflation may remain at a consistently low level, despite the decision to raise interest rates.
The pound fell against the dollar by updating at least 2015, which was established on April 13 and reached its lowest level since June 11, 2010. The pressure on the currency has continued collapse in global stock markets and the decline in oil prices to a 12-year low. Little support was provided data on the housing market in Britain. The Halifax Bank of Scotland reported that house prices increased significantly at the end of December, while exceeding the forecasts of experts. According to the data, housing prices rose 1.7 percent in December after a zero change in November (revised from -0.2 per cent). Economists had forecast growth of only 0.5 percent. On an annual basis, prices in the period from October to December increased by 9.5 percent compared with an increase of 9 percent over the previous three months (in November). It was expected that the growth rate will remain unchanged. "The housing market remains a significant difference between supply and demand. The latest data pointed to a further reduction in the number of homes available for sale, - said Martin Ellis, economist at Halifax. - This situation is unlikely to change significantly in the short term, this should not expect continued growth housing prices. "
In general, the pound remains bearish bias after the Federal Reserve raised its rate, as well as the Bank of England rumors that the regulator did not dare to, and an important step in 2016. In addition, investors are waiting for a report on employment in the United States, scheduled for Friday, which will help to assess the Fed's intention to continue the gradual tightening of monetary policy. It is expected that the number of people employed in non-agricultural sector increased by 200 thousand. In December, after increasing by 211 thousand. If the figures exceed the forecasts, the fall of GBP / USD pair may accelerate.
The euro rose substantially against the dollar, recouping all the ground lost since the beginning of the week. Experts point to risk aversion, which has intensified because of another collapse of world stock markets, the euro as the currency of funding was the winner. The focus of macroeconomic reports were also in the euro area, which were mixed. A report from the European Commission showed economic sentiment in the euro zone rose to 106.8 points in December from 106.1 points. Economists had expected the figure will not change. Business climate index, which points to the phase of the economic cycle, improved to 0.41 from 0.36. Experts predicted to rise to 0.40. The index of consumer sentiment rose to -5.7 from -5.9, which coincided with the forecasts of experts.
Meanwhile, data from Eurostat showed that at the end of November the unemployment rate in the euro area decreased to 10.5% from 10.6% in October (revised from 10.7%). The latter value was the lowest since October 2011. Experts expect that the unemployment rate will be 10.7%.
In addition, Eurostat reported that the results of November retail sales (seasonally adjusted) fell by 0.3% in the euro area and increased by 0.2% among the 28 EU countries. Recall that in October there was a decrease in sales of 0.2% in the eurozone and a zero change in the EU. It was expected that sales in the euro zone will grow by 0.2%. In annual terms, the index of retail sales rose by 1.4% in the euro area and by 2.6% in the EU. It was predicted that sales in the euro zone will grow by 2.0% after rising 2.4% in October (revised from 2.5%).
The Japanese yen has risen more than 100 pips against the dollar, entrenched below Y118.00, which was caused by a new wave of risk aversion and increased demand for safe-haven assets. The yen has risen on the news about another devaluation of the yuan and the collapse of the Asian markets, which were followed by European markets. Recall, China's stock market half an hour after the opening exchanges closed because of the collapse of quotations by more than 7%. In addition, China is now sharply lowered rate of the yuan against the dollar - 0.51%, which caused further concern among market participants. Central Bank set the official exchange rate of the local currency at the level of 6.5646 yuan per dollar, which is the lowest level since March 2011. Yesterday's rate fixing was 6.5314 yuan per dollar, and closing - 6.555 yuan per dollar.