U.S. Durable Goods Orders Fall

Durable goods orders for the month of October fell by 0.7% due to drop in sales of aircraft and business equipment. This was slightly better than analyst expectations of a drop of 1.1%. The durable goods orders fell by 0.8% in the month prior. Orders for computer and business equipment and non-defense capital goods fell by 1.8%.

U.S. initial jobless claims increased to 393,000 in October from 391,000 in September according to the latest figures released by the Labor department. This came above analyst expectations of 390,000. Retailer’s like Macy’s have announced that they will add part time positions this holiday season. The number of people on unemployment insurance increased while those on emergency benefits declined. Fed Chairman Ben Bernanke and President Obama have urged Congress to implement measure to bring down the unemployment rate down from the current levels of 9%. In October, the Non-Farm payrolls reported a creation of 80,000 jobs in the economy.

Consumer spending rose by 0.1% in October while wages rose by 0.5%. While wages rose, spending did not rise at the same pace. Consumers used the rise in wages to increase their savings rate. Consumer spending accounts for a big sector of the economy and retailers are anxiously waiting for the start of the holiday season in the U.S.

The EURUSD broke support at 1.3400 in today’s U.S. session. The pair has been under pressure due to the disappointing bond auction out of Germany. An auction of German government bonds technically failed today when the auction attracted bids totaling 3.880 billion Euros, falling short of the 6 billion Euro auction. This left the German central bank with extra supply. This shows that investors are trying to avoid all Euro zone debt and not just weaker countries. Given the lack of liquidity in the markets ahead of tomorrow’s holiday, we expect the EURUSD to consolidate for the rest of the week.

Eugene Ross, Analyst
Admiral Markets

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