Euro weakens across the board after release of a string of weak economic data. Germany's unemployment rose by 56 K in January, almost doubled market expectation of 30K and revised 33K in December. Unemployment rate climbed highly to 7.8% from 7.7% in the previous month as business activities slowed down and companies cut positions. In the coming few months, we will likely see further rise in unemployment rate. Eurozone's M3 money supply growth slowed to 7.3% yoy, the lowest level in 5 years, in December following a 7.7% gain in the previous month. Though less severe than market anticipation, business climate in the Eurozone plunged to -3.16 in January compared with revised -3.09 in December while economic sentiment fell to 68.9 from revised 70.4. Consumer confidence came in inline with consensus at -31, from -30 in December.
Euro's weakness is felt across the board. In particular, EUR/GBP has now taken out near term support level at 0.9213 and is focusing on trend line support at 0.9071. As noted in our daily outlook reports, we're favoring the case that whole medium term rise from 0.6535 has topped out with five waves up to 0.9799 already. The mentioned trend line support will play an important role and in affirming this view.
Also released today, UK Nationwide House price drop further by -16.6% yoy in Jan. In Japan, retail sales in December plunged -2% mom in December, more than market expectation of -0.8% drop and -0.1% drop November. On annual basis, it fell -.7%, the biggest decline since 2005 as consumers reduced spending on unemployment concerns. New Zealand's trade deficit came in at NZD -347M in December, worse than consensus of NZD -100M, after a revised deficit of NZD -588M with exports rose 4.8% from a year ago to NZD 3.85B and import dropped for the second month to NZD 4.2B.
Looking ahead, US durable goods orders are expected to show another substantial decline (consensus:-1.8%, January: -1.5%) in December after the new orders index in the manufacturing ISM report plunged to the lowest level since 1948. Both ex transportation and ex defense indices are expected to have dropped severely, by -2.7% and -2.1% respectively. Initial jobless claims should remain elevated at 575K for the week ended Jan 24 while 4-wweek average is expected to have risen to 540 after noticeable fall to 519 in the previous 2 weeks. Economists expect new home sales to fall slightly to 0.4M in December from 0.41M in November. However, since mortgage rates have been dropping since late November, some home sales data have started to shown improvement, we may have upside surprise today. Canada's PPI in December is expected to have contracted further by 2% mom following a 2.6% decline in November.