US Unemployment Declines to 10%

According to the US Bureau of Labor Statistics, the US jobless rate dropped to 10 percent level in November from 10.2 percent in October. These figures show that the US job market is getting out recession, however, significant obstacles remain. In November employers fired 11,000 workers, far below prior expectations of 150,000, Bureau of Labor`s figures show. The strong improvement surprised analysts, mentioning that the US job market still remains weak, however, moves into right direction.

The highest degree of employed people was seen in business and professional services adding 86.000 jobs. Employment in healthcare and education showed signs of recovery, while construction and manufacturing industry delivered 27.000 and 41.000 monthly job losses correspondently. However, there are still over 15 mln people unemployed in the USA, this number is twice bigger than before the recession started in 2007.

President Barack Obama called this data “good news” and promised to continue carrying out his programs aiming at hiring people.

After the official report the US Dollar spectacularly appreciated versus other Forex currencies.

Euro-zone Economic Confidence Shows Recovery on the Way

Euro-zone economic confidence in November showed signs of improvement delivering signal that the region is getting on rail of recovery.

Indicator of consumer sentiment rose to 88.8, European Commission figure say. This figures appear to be higher than expected level of 88. Manufacturing and services rose for a fourth straight month spurring up the degree of business activity in 16-nation region.
A better than expected result is mainly driven by ECB`s stimulus programs and its policy of close to zero rates. High unemployment rate and rising Euro are the sources of concern, threatening to slower recovery.

The business activity indicator inclined to -1.56 from revised -1.79 which is higher than the estimated -1.65. European consumer confidence in November rose to -17 better than prior -18 matching expectations. The news affected Forex market investors encouraging them to buy Euros.

Earlier the ECB Chairman Jean-Claude Trichet expressed the idea that the Euro-zone`s recovery will continue growing steadily in 2010. The bank made a decision to buy covered bonds and gave billions of euros to markets within the frames of its emergency programs.

UK Inflation Climbs in October

The inflation rate in the UK climbed higher than experts predicted showing the first rise in last eight months. UK consumer prices rose 1.5 percent compared to 1.1 last months. The experts predicted 1.4 percent rise.

The reasons of such reading are and air fare costs and fuel prices as fuel producers shift their trading terms. However, between September and October the cost of fuel dropped by 0.7 percent.

Prices for second-hand cars, caused by a shortage of stock, rose at the fastest pace pushing up inflation in October, the figures released by the Office for National Statistics showed today. Climbing prices of recorders, games and toys also contributed to inflation.

According to the Bank of England`s growth and inflation forecasts released November, 11, the inflation will not reach 2 percent level until 2012. As the UK economy recovers there are some risks of rise in consumer prices, that is why the Bank of England ties not to withdraw stimulus measures too early and sticks to its low lending rate policy.

Economists Predict Us Jobless Rate to Hit 13% Level

The unemployment rate may shortly rise to 13 percent level, the highest level since World War II, David Rosenberg, an economist at Gluskin Sheff & Associates Inc.

This prediction was made after the US Department of Labor released negative unemployment figures showing that the US jobless rate, one of the most important economic indicators, unexpectedly hit the level of 10.2 percent. David Rosenberg gave an interview to Bloomberg news agency. In this interview he said that “this is going to be the mother of all jobless recoveries.” He also noted: “At the beginning of the year, who was calling for unemployment to go up to 10 percent?”

In the near future joblessness rate has all the prerequisites to reach the 13 percent level. The rate of 13 percent would be the highest since monthly records started in January 1948. Previously postwar maximum was 10.8 percent in 1982. During the Great Depression in 1933 unemployment jumped nearly to 25 percent.

Besides, the under-employment rate, including part-time workers who would prefer a full-time post, and people who would like to work and have given up looking, hit 17.5 percent last month, the maximum reading since records started in 1994.

Significant Losses for BMW, but still Good Prospects

BMW, one of Germany`s leading carmakers reported a slump in earnings for the third quarter as a result of decline in consumer spending.

Net earnings of BMW sank 73.8 percent to 78 million Euros, but the carmaker expects to end the year with profit after signs of recovery emerged. Third quarter figures delivered that sales of Rolls-Royce and Mini BMW brands contracted 7.2 percent. The overall decline in 2009 is now 15.7 percent comparing with a year ago.

Norbert Reithofer, the BMW top manager says that stimulus measures already put in place now start taking effect increasing company efficiency and reducing costs. He predicts moderate recovery over 2010 and security on the car market.

In spite of all losses the board of managers is targeting to achieve positive net profit this year. Usually carmakers do not worsen at the end of the year. Last year BMW sold near 1.43 million vehicles.

Euro Drops ahead of German Key Figures. Latest Currency Market Update

Yesterday the EUR closed trades at 1.4769 versus the USD, the weakest level for the last two weeks. On Tuesday the European currency was at 1.4802, a little bit lower from Monday 14-month high of 1.5064 per Dollar on Monday morning. The EUR/JPY was 135.88, lower from 137.08 on the currency market.

The European currency drop is described by concern on negative German unemployment data due to be released tomorrow. The reading is expected to be 8.3 percent in the month of October, a 0.1 percent drop from September figures. Also the separate researches show that commodity and stock market is likely to peak as recovery in the USA seems to be fragile.

Among today`s important events in economic calendar the major one is the German CPI figures likely to deliver worsening of consumer prices. The Euro will probably lower a little bit moving away from 1.500 level versus the USD.

14-Month Low for the Dollar

The USD reached its 14-month low versus the EUR as investors choose higher yielding assets for trading abandoning dollars. On Tuesday the EUR/USD reached the top of $1.4828 and ended trades at $1.4786. The last time when these results were seen was August 2008. Gold seems to be the most attractive asset for trading.
The investors looking for high yield ignored pessimistic Euro-Zone economic data to ensure the better-returning Euro to $1.50. It seems that this level will be attained shortly.

The greenback may drop even more today before the government reports its forecast to deliver consumer prices rose last month. This report is one the most important economic events for today.

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Consumer Confidence in UK Reaches Its 18-Month High

According to U.K. Nationwide Building Society, consumer confidence index rose to 71, its highest point for the last year and a half. Such an increase adds to recovery signs showing that the U.K. economy is on its way to complete growth.
Tomorrow Bank of England is supposed to announce its further direction of the monetary policy probably keeping its benchmark interest rate at its current low in spite of all signs that the recession fades away.

Economic reports last week appeared to deliver positive information. Thus, U.K. house prices have already reached its last year levels showing the end of shrinking in house sector. Consumer spending rose by 3 percent to 103 level.

Some positive news from labor market in Great Britain: the measuring of hiring for jobs inclined to 51.3 in September, from 50.6 in August.

American Unemployment Rises

American job market remains now the worst problem zone in the US economy. 263,000 Americans lost their jobs in September much worse than expected by the market analysts. The major losses are seen now in services and construction industry. Thus, the unemployment rate in September is 9.8 percent from the active part of the population. Last month the jobless rate was 9.7 percent. Current result has been considered as the lowest one for last 26 years. 10 percent mark will probably be attained by the end of the year.

Worse than expected employment data have stopped and reversed the USD upside trend. This had traders questioning the US economy recovery and pushed them away from trades with dollar in the list of their financial operations.

ECB`s Decision Spurs the EUR for a Jump

Yesterday the ECB announced it would lend banks 75.2 billion euros for a year term at the current interest rate of 1%. The number appeared to be lower, than it was anticipated by the experts. The EUR/USD currency pair achieved the level of 1.4634 from 1.4581 point marked on Tuesday. Loose economic policy measures encourages traders who use trading software to choose risky assets for trading.

The unexpectedly low PMI report added to a mixed results of U.S. data released Wednesday, including an improved second-quarter U.S. GDP report, but disappointing U.S. jobless claims, confirming investors' speculations that a sustained economic recovery won't take hold.

The GBP has continued its further falling against other currencies traded on the Forex currency market, unable to shake off the comments by Mervyn King Bank, the Bank of England governor that a weak Pound would be an advantage for the U.K.'s recovery from the global downturn. In today's trading the GBP is at $1.5942 versus the USD.

Today the ministers of finance of EU countries meet in Sweden to discuss further direction of the European economy.

Bearishness as Future for Dollar

The advance of the USD continues. The EUR/USD pair is now traded 1.4620. And the GBP/USD is close to 1.5900 level durinf European forex trading hours. The JPY is the only currency to gain versus the greenback after reaching its 8-month low of 88.22. The pair is now traded near 90.00 mark as the latest Forex quotes show. Announcements made by Minister Fujii have producedinfluence on many traders wondering if Japan will not intervene in its currency's recent rise. If it chooses not to do that, the target for the USD/JPY may be close to 82.00 very soon.

Looking ahead to today`s events, however, the most important one will be the Conference Board's release of their Consumer Confidence announcement at 14:00 GMT. As the trend is currently pointing towards rising optimism in the US, bearishness for the USD may still be seen today.

Federal Reserve May Announce Exit of Stimulus Measures

Concern that FOMC may remove stimulus measures encouraged appeal for the US Dollars. As a result the Dollar reached its week high versus the Yen and the Euro, according to Bloomberg.

Many economists tend to suppose that FOMC is likely to become a catalyst of USD rising as FED will probably announce the withdrawal of its economy stimulus measures. The USD rose to 92.17 yen as of 7:45 a.m. in London from 91.29 yen in New York Sept. 18. It jumped to $1.4645 per euro from $1.4712. The U.S. currency advanced to $1.6143 per pound from $1.6271, after earlier touching $1.6135, the highest level for the last three weeks. The USD index climbed 0.6 percent to 76.878.

The JPY fell to its three-week bottom versus the Euro after Hirohisa Fujii new Finance Minister refused to make comments meaning he would let the Japanese currency rise.

It is expected that Japan will remain the only country among big economies that will keep its benchmark interest rate at a record low. Japan`s Overnight call rate is now at the lowest level worldwide . The economy is likely to expand 0.8 percent next year after declining 6 percent in 2009 putting assets in the world’s second-largest economy not in favor comparing to those in countries with higher borrowing rates.