THE TAKEAWAY: Initial Jobless Claims declined last week; Trade Deficit unexpectedly narrowed in September to smallest since December 2010 > Improvement in jobless may be due to impact of recent hurricane; Growth in emerging markets boost demand for U.S. exports > USDJPY mixed
The U.S. trade deficit unexpectedly narrowed in September to its smallest gap since December 2010, as exports rose to a record high. The U.S. Department of Commerce reported that the trade deficit shrank by 5.1 percent to $41.5 billion in September from $43.8 billion in August. The department had initially reported a trade gap of $44.2 billion in August. The median forecast of 75 economists surveyed
Bloomberg News had projected a widening of the trade deficit to $45.0 billion.
While a slowdown in China and Europe has been weighing on demand for American goods, increasing demand from emerging markets such as South and Central America is helping to boost exports and narrow the trade deficit.
Separately, the Labor Department reported that the number of Americans filing first-time applications for unemployment benefits unexpectedly declined last week. Initial jobless claims fell by 8,000 to a seasonally adjusted 355,000 in the week ended November 3 from 363,000 the week before. Economists surveyed by Bloomberg News had forecast a rise in claims to 365,000.
The drop in jobless applicants may have been affected by Hurricane Sandy, as jobseekers were unable to file claims in impacted areas.
USDJPY 1-minute Chart: November 8, 2012
Chart created using Market Scope – Prepared by Tzu-Wen Chen
Immediately after the release of the two reports, the U.S. dollar spiked higher against the Japanese yen, its safe-haven counterpart, before retracing back to pre-release levels. At the time this report was written, the USDJPY pair had fallen below pre-release levels to trade at 79.87 yen.
--- Written by Tzu-Wen Chen, DailyFX Research