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US Jobless Claims Decline

First Time Unemployment Claims Pullback From Previous Week’s Multi-Month Highs

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Following the Federal Reserve’s interest rate hike, statistics for the US continue to display positive results having recorded a decline in unemployment claims following the prior week’s uptick. The week ending December 12th had a decline of 11,000 applicants compared to the previous week according to the US Department of Labor.

Japan Adds to ETF Purchases

While the Bank of Japan announced no new changes to prevailing interest rates at 0.10% where they have sat for years, the Central bank opted to increase purchases of exchange trade funds (ETFs) starting in April of 2016.  Helping the BoJ avoid more extreme monetary policy measures is the recent decision from the Federal Reserve to begin the liftoff process for US interest rates.  This will add tailwinds to the US dollar that should keep the Japanese Yen weaker in the meantime, helping to boost exports.  However, as evidenced by the latest policy statement from the Central Bank, Japanese inflation is likely to trend near 0.00% for the year amid the downturn in trade and weakness in energy prices.  The main risks are emanating from emerging markets and commodity-driven economies.  However, the existing quantitative and qualitative easing program should be enough to insulate the economy from external developments as they arise.

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Norway Leaves Rates Unchanged

The Central Bank of Norway, the Norges Bank, stated on Thursday that its main rate will remain at 0.75%, surprising economists’ expectations of a decline to 0.50%. Norway’s Central Bank suggested that the rate might be lowered next year if a dim outlook persists for the oil dependent country. For the time being, the Bank believes that lowering the key policy rate may increase the risk of a more rapid rise in the real estate prices and increase existing debt levels. The Norges Bank on Thursday highlighted the substantial negative impacts of weak oil prices, warning that household consumption and private sector investment are now expected to be lower than previously anticipated. The Federal Reserve’s interest rate rise is expected to ease pressure on smaller central banks that have been trying to keep their currencies from appreciating according to the Central Bank.

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Jobless Claims Dip in the US

The number of Americans filing for unemployment benefits last week fell from a five-month high. Initial jobless claims showed that 271,000 applicants filed for unemployment the week ending December 12th, compared to previous week’s high of 282,000 applicants and exceeding estimates of 275,000. The claims data covered the survey period for December nonfarm payrolls. The decline was noted to be the 41st consecutive week that claims remained below the threshold of 300,000. The positive data suggests sustained gains in the labor market supporting the Central Bank’s decision to hike rates on Wednesday and reinforcing the notion of further hikes in the coming year. Although the US dollar has reversed from yesterday’s gains overnight, the bias remains to the upside for the currency all the while equities tumbled substantially with the S&P 500 tumbling -1.50% during the cash equity session.

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UK Retail Sales Surge

Retail sales in the United Kingdom rose by more than expected in November, as shops offered promotions at the end of the month in the run up to Black Friday and ahead of the Christmas holidays. The Office for National Statistics recorded an increase in sales volumes by 1.70% in November rising well above the prior month’s contraction of -0.50%. Markit Chief Economist Chris Williamson stated that households are benefitting from improved job security, low inflation and falling energy prices. The decline in energy prices, in general, is presumed to have helped in money saving benefiting in more income savings resulting to the boost in retail sales alongside the gains in wages. But in contrast to the Federal Reserve’s hawkish decision on Wednesday, the Bank of England has held off on raising interest rates while inflation remains near a record low.

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