The U.S. durables report revealed lean September orders ex-transportation with a small drop in transportation orders and a big drop for defense, alongside divergent equipment data with shipments gains that lifted Q3 prospects slightly, but with orders weakness that slightly trimmed Q4. We also saw firm shipments data and lean inventories that left no impact on 3.3% Q3 GDP forecast. Expectations are for a 2.6% (was 2.9%) contraction rate for real equipment spending in tomorrow’s GDP report, after a 2.9% rate of decline in Q2. Also expect an $11 (was $12) bln Q3 inventory addition that leaves a $2 bln accumulation rate, following five prior consecutive inventory subtractions that culminated with a $9.5 bln liquidation rate in Q2 that was the first drop since 2011.
U.S. initial jobless claims fell 3k to 258k in the week ended October 22 from a revised 261k previously (was 260k). That brought the 4-week moving average up to 253.0k from 252.0k (revised from 251.75k). Continuing claims declined 15k to 2,039k in the week ended October 15 versus the prior 4k rise to 2,054k (revised from 2,057k). The BLS said there were no special factors affecting claims last week.
The USD reacted positively to this as USDJPY hit a three month high at 104.88, EURUSD 1.0918 and Cable continues to pivot around 1.2200 at 1.2215. Gold dipped too and trades under USD 1270.00.
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