US Jobless Claims Fall Unexpectedly, Chinese Manufacturing Expands

 | Jan 28, 2013 06:51AM ET

Jobless claims in the United States last week unexpectedly fell with applications for unemployment payments falling to 330,000 against expectations of 355,000 in claims. A survey conducted by HSBC and Markit Economics saw their China Purchasing Managers' Index gain to 51.9 from 51.5 the previous month and indicates that the Chinese economy is improving at a faster rate than many, including ourselves, have expected. The data precipitated a rally in the euro to a high above 1.3390 overnight. Surprisingly, in what could be interpreted as a sign of further weakness, the Australian dollar fell by almost 1% to open this morning at 1.0460.

The expansion of Chinese manufacturing at the fastest pace of growth in two years prompted the Japanese Yen to fall significantly to once again to breach the 90.00 USD/JPY level. The move was aided by comments from Japanese Deputy Economy Minister Nishimura who said that the yen's decline is far from over and that he wouldn't be concerned by USD/JPY at 100. The moves by the new Abe government to introduce “unlimited easing” are beginning to attract global criticism with German Chancellor Angela Merkel saying in Davos. Switzerland, that the Japanese's government's policy of increased monetary easing is a risk to the global economic recovery. The Yen slumped more than 1.5% to trade at 90.10.

U.S. equity markets continue to perform well with the S&P 500 trading above 1,500 today despite a 12% slump in Apple shares to below $455.00 on higher production costs. The company's shares have now plunged more than 35% since hitting a record high in September last year and there is increasing pressure on the company to introduce more game-changing products to revive sales. The company may soon relinquish its position as the world's most valuable company to Exxon Mobil as its share price continues to fall. The S&P 500 has closed flat at 1,494.82. Earlier in Europe, indexes where mixed but both the DAX and the FTSE managed modest gains.

Commodities were mostly unchanged even though strong China data precipitated a rally in other asset classes. The UBS Bloomberg CMCI lost 0.12%. WTI crude has firmed in response to better than expected global economic data to open this morning 0.8% higher at $96.00. Precious metals lost ground with gold falling 1.12% to $1,667 while silver slumped 2.36% at $31.68. Agricultural commodities were mixed while copper fell 0.2%.