U.S. Jobless claims rise as FOMC Meeting looms ahead

The U.S. reported jobless claims rose to 428,000, up by 11,000 in the week that ended September 10. Bank of America and Cisco Systems have announced plans to layoff thousands of workers. This economic data puts more pressure on Fed Chairman Ben Bernanke and President Barack Obama to provide additional measures to spur the economy. The CPI increased 0.4% in August as consumers paid more for food, energy, and housing. Core CPI rose 0.2% in August.

British retail sales numbers were reported for the month of August. The volume of sales decreased 0.2% from July. There was no growth in the value of retail sales over the same period. For the year, retail sales saw no growth in volume between August 2010 and August 2011. Retail goods accounted for GBP25.4 billion of total sales, up from GBP24.3 billion from August 2010. The upward pressure on retail sales came from non-store retailing. Automotive fuel increased by 1.6%. Downward pressure came from non-food stores which decreased by 1.2%. The decrease was lead by household good stores.

The Bank of England inflation survey for August 2011 shows that the public perceives the current annual rate of inflation at 4.8% up from 4.5% in May.

The Euro zone inflation rate held steady in August at 2.5%, same as July. The reasons cited were the ongoing debt crisis and the declining costs of energy. European Central Bank President Jean-Claude Trichet took a dovish approach during the ECB press conference and called inflation risks “broadly balanced.” The European unemployment rate held at 10% in July as governments continue to cut public sector jobs and implement austerity measures. Germany reported that second quarter employment rose 0.4%, France and Italy reported 0.3% growth each. Spanish employment rose 0.4% and Portugal reported a 0.1% increase. The growth was in line with Trichet’s statements last week. He expects the euro zone economy to grow moderately and inflation to stay above 2% over the coming months. Euro zone core inflation which excludes energy held steady at 1.2% in August.

The EUR/USD is heading higher after France and Germany promised to help Greece. German chancellor Angela Merkel and French President Nicolas Sarkozy said that Greece will stay in the euro zone. The EUR/USD is testing resistance at 1.3900 at the time of writing this report. If this level is decisively broken, the next level of resistance is at 1.4000.

Eugene Ross, Analyst

Admiral Markets

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