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GREENBACK DIPS AFTER DISAPPOINTING RETAIL SALES AND JOBLESS CLAIMS FIGURES

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GREENBACK DIPS AFTER DISAPPOINTING RETAIL SALES AND JOBLESS CLAIMS FIGURES 1

All eyes last week were on dollar’s slide against all rival currencies, after the release of disappointing U.S. retail sales report for January and unexpected rise in initial jobless claims the week ended February 8.

Official data from the U.S. Commerce Department published on the economic calendar on Thursday, February 13th, showed a slide in retail sales for the second consecutive month in January. The report indicated that retail sales decreased by a seasonally adjusted 0.4% the previous month, upsetting expectations for a 0.3% rise and seriously questioning the outlook of the U.S. economic recovery. December’s figure was revised down to 0.1% decline from a previously reported 0.2% gain, when winter clothing sales rose. Strong retail sales associate with robust economic growth, while decreasing retail sales show a declining economy, thus directly affecting the market sentiment in a negative way.

The report also indicated that core retail sales, excluding automobile sales, were flat in January, compared to expectations for a 0.1% increase. The corresponding figure in December was revised down to a rise of 0.3% from a formerly documented upsurge of 0.7%. Core sales reflect on the consumer spending element of the U.S. Gross Domestic Product. It is noteworthy that consumer spending accounts for 70% of the overall economic growth.

The median estimate of 86 economists surveyed by Bloomberg News before the release of the official data in Thursday, showed stagnation in U.S. retail sales in January. In anticipation of the report, TeleTrade analysts said that “a probable decline or flat outcome on retail sales report, will provide little motivation for traders to buy the greenback, where this in the short-term will imply little prospective for the currency’s recovery”.

Meanwhile, official data from the U.S. Department of Labor showed that the number of individuals who filed for unemployment assistance in the week ending February 8, increased to 339,000 from the previous week’s figure of 331,000. Economists had anticipated jobless claims to drop by 1,000 to 330,000, so the announced figure came as a shock. The unexpected 8,000 weekly increase fuelled traders’ concerns over the strength of the U.S. labor market.

Euro gained ground

Following the release of the weak data on Thursday, 13, the single currency rose versus the U.S. dollar, with EUR/USD climbing up to 0.65% to 1.3681, rebounding from the previous session’s lows of 1.3561, after the statements of Benoit Coere – ECB member – that the ECB is seriously considering a negative overnight interest rate on deposits.

In Friday 14, however, the single currency peaked to an almost three-week high against the greenback, with EUR/USD gaining 0.08% to 1.3691. The euro found further support after the release of preliminary data reporting rise in Eurozone’s Gross Domestic Product by 0.4 in the last quarter. The report that was published by Eurostat, exceeded forecasts for a 0.2% increase, following a merely 0.1% rise in Q3. Eurostat’s data also indicated that the seasonally-adjusted GDP growth in the Eurozone area was projected to be 0.5% up compared to the last quarter of 2012.

Another report earlier in the day, indicated that the German GDP increased by 0.4% in Q4, above forecasts for a 0.3% increase, while the French GDP rose 0.3% during the same period, with regard to forecasts for a 0.2% rise.

GBP in 33-month high

The sterling edged up to a 33-month high versus the U.S. dollar on Friday, with GBP/USD increasing to 1.6715 during European morning session. The cable strengthened significantly after the Bank of England revised its forecast for the U.K. economy from 2.8% to 3.4% for the current year on Wednesday, 12.  The BoE also updated its forward guidance on bank rates, stating it will not increase rates until the spare capacity in the U.K. economy has been fully absorbed, which it is not expected to occur until 2015.

Performance of Other Major Currencies

In the wake of the unexpectedly weak data on Thursday, the USD/JPY hit 101.71, the lowest since February 7. The greenback remained lower on the following day, with USD/JPY reaching 101.85. The yen generally found support against its rival counterparts at the end of the week, as decreases in Asian equities enhanced demand for Japan’s safe currency.

On Friday 14, the U.S. dollar also edged lower versus the Australian and New Zealand dollar, with AUD/USD rising 0.51% to 0.8924 and NZD/USD gaining 0.32% to 0.8368, after the announcement of positive inflation figures from China, as the country is the main trading partner of both Australia and New Zealand. The greenback lowered against the Swiss franc and the Canadian dollar, with USD/CHF falling 0.11% to 0.8926 and USD/CAD dropping 0.20% to 1.0953.

Among weak retail sales and employment numbers, the U.S. dollar index, which records the overall performance of the currency against a basket of six other major currencies, fell 0.18% to 80.21 on Friday, which is the lowest in more than a month.

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FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks

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FTSE Russell to include 11 stocks from China's STAR Market in global benchmarks 2

SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according to a post on its website from Friday.

The move marks the first time shares from Shanghai’s Nasdaq-style STAR Market for stocks in China have been included in a global index.

The 11 stocks include Raytron Technology Co Ltd, Zhejiang HangKe Technology Co Ltd, Montage Technology Co Ltd, Advanced Micro-Fabrication Equipment Inc China.

(Reporting by Josh Horwitz and Samuel Shen in Shanghai; Editing by William Mallard)

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims

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UK insurers estimate to pay up to 2.5 billion pounds for coronavirus claims 3

(Reuters) – The Association of British Insurers (ABI) said on Saturday insurers are likely to pay up to 2.5 billion pounds ($3.50 billion) for UK’s COVID-19 insurance claims incurred in 2020.

The latest estimates include 2 billion pounds for COVID-19 business interruption claims and 500 million pounds for COVID-19 related protection insurance claims, travel insurance claims and other general insurance products.

ABI’s Director General Huw Evans said in a release that the pandemic illustrated some uncomfortable gaps between what people expected to be covered for and what their policy was designed for.

“We need to learn lessons from this unprecedented event and redouble our efforts to improve consumers’ trust in insurance products,” he added.

The insurance trade body said 123,000 claims have been settled with payment so far and a further 9,000 have received partial payments as of mid-January 2021.

($1 = 0.7139 pounds)

 

(Reporting by Maria Ponnezhath in Bengaluru; Editing by Marguerita Choy)

 

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Oil extends losses as Texas prepares to ramp up output after freeze

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Oil extends losses as Texas prepares to ramp up output after freeze 4

By Devika Krishna Kumar

NEW YORK (Reuters) – Oil prices fell for a second day on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages.

Brent crude futures ended the session down $1.02, or 1.6%, at $62.91 a barrel while U.S. West Texas Intermediate (WTI) crude fell $1.28, or 2.1%, to settle at $59.24.

For the week, Brent gained about 0.5% while WTI fell about 0.7%.

This week, both benchmarks had climbed to the highest in more than a year.

“Price pullback thus far appears corrective and is slight within the context of this month’s major upside price acceleration,” said Jim Ritterbusch, president of Ritterbusch and Associates.

Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude production and 21 billion cubic feet of natural gas, analysts estimated.

U.S. energy firms this week cut the number of oil rigs operating for the first time since November, according to Baker Hughes data.

Texas refiners halted about a fifth of the nation’s oil processing amid power outages and severe cold.

Companies were expected to prepare for production restarts on Friday as electric power and water services slowly resume, sources said.

“While much of the selling relates to a gradual resumption of power in the Gulf coast region ahead of a significant temperature warmup, the magnitude of this week’s loss of supply may require further discounting given much uncertainty regarding the extent and possible duration of lost output,” Ritterbusch said.

Oil prices fell despite a surprise drop in U.S. crude stockpiles last week, before the big freeze hit. Inventories fell 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday. [EIA/S]

“Vaccines and the impressive rollouts we’ve seen have delivered strong gains, as have the efforts of OPEC+ – Saudi Arabia, in particular – and the big freeze in Texas, which gave oil prices one final kick this week,” Craig Erlam, senior market analyst at OANDA, said.

“With so many bullish factors now priced in, it seems we’re seeing some of these positions being unwound.”

The United States on Thursday said it was ready to talk to Iran about returning to a 2015 agreement that aimed to prevent Tehran from acquiring nuclear weapons. Still, analysts did not expect near-term reversal of sanctions on Iran that were imposed by the previous U.S. administration.

“This breakthrough increases the probability that we may see Iran returning to the oil market soon, although there is much to be discussed and a new deal will not be a carbon-copy of the 2015 nuclear deal,” said StoneX analyst Kevin Solomon.

(Additional reporting by Ahmad Ghaddar in London and Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Marguerita Choy, David Gregorio and Nick Macfie)

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