EUR/USD lost more than 100 points after the European Central Bank (ECB) decided to cut interest rate with 0,25 % to a historical low of 0,50. The Euro fell immediately on the announcement and trades at 1.3074. The decision received cheers from stock markets which rallied in early Asian trade on Friday. In the US Wall street was helped by a sharp fall in last week’s jobless claims which fell to its lowest level in five years.
The smaller number of Americans seeking jobless benefits claims was seen as a sign of a healing job market in spite of the presentation a ray of weak economic data lately. US stocks were also helped by a narrowing trade gap in March. The fact that both imports and exports fell, indicate, however, weaker demand, and tells of weakening growth momentum both in the US and globally.
Initial claims for state unemployment benefits dropped with 18 000 last week to seasonally adjusted 324 000. The claims report runs counter to a number of signals of economic activity softening in March and April. The data has no direct bearing on the Labour Department’s monthly employment report which is expected later today. It suggests, however, that employers are feeling less pressure to lay off workers even if they have cut back on hiring.
Oil, copper and gold prices traded higher with Brent crude up 2 % to 102,65. The US stock rally was led by tech shares. Facebook delivered better than expected and rose 5 %. The ECB decision to cut rates for the first time in 10 months helped market sentiment and bolstered the content of the Federal Reserve (FED) statement Wednesday. FED will continue to buy bonds to keep interest low and spur growth. If necessary FED kept the door open for stepping up the purchases. Also the ECB kept options for further action to stimulate the economy.
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