MidSession Review: Will buoyant Macro Data Offer Support?

Today's good news comes from Jobless claims: fewer Americans filed first time applications for unemployment benefits last week.

Jobless claims decreased by 23,000 to 369,000 in the week ended Oct. 20 from a revised 392,000 the prior period, the Labor Department reported. The median forecast of 48 economists surveyed by Bloomberg called for a drop in claims to 370,000. The number of people continuing to receive jobless benefits fell by 2,000 in the week ended Oct. 13, to 3.25 million.

Another report today showed demand for durable-goods climbed 9.9% last month, marking the biggest gain in more than a year and a half. Orders in August had declined by the largest amount in three years; economists polled by MarketWatch had expected an 8.3% increase. Bookings jumped 9.2% for heavy machinery and 4.1% for primary metals, but they fell for computers, electronics, electrical equipment and communications gear.

Data in US supported the “long” side of the market although the day started under the best auspices with the words of the Chinese Ministry of Industry and Information Technology, who said that China's factory output should grow faster in the last three months of 2012 than in the third quarter, raising hopes the world's second largest economy may avoid a hard landing to its slowdown.

The boost came after data showing UK GDP rose 1-0 percent between July and September as strong tickets sales for the London Olympics boosted growth. Excluding transportation, new orders for durable goods rose a much smaller 2.0% in September, suggesting the US manufacturing sector remains on a soft pace.

Minutes before the US opening bell the STOXX500 trades 0.36% higher at 2,499.60, the German Dax rises 0.55% at 7,235.18, in Southern Europe the Spanish Ibex is trading 0.11% higher to 7,800.20 while the Italian Ftsemib is leading losers trading 0.06% lower to 15,697.70.

Spanish government 10-year bonds yields were flat at 5.575 percent, while Italian peers fell less than a basis point to 4.839 percent.

In the currency space, after US macroeconomic data have been released the greenback pared early losses, the dollar index, a measure of the U.S. unit against a basket of six major currencies, traded at 79.919, from 79.825 before the report and 79.932 in North American trade late Wednesday. The euro pared gains to $1.2977 versus $1.2971 late Wednesday.

Dollar weakness boosts dollar-denominated commodities such as Oil and Gold, the most actively traded December contract for the yellow metal rose 0.88% to 1,716.80$ an ounce. Oil for December delivery  gained 75 cents to $86.48 a barrel in electronic trading on Globex. The contract fell 1.1% Wednesday, ending below $86 a barrel for the first time since July, after the Energy Information Administration reported a 5.9- million–barrel increase in crude supplies for the week ended Oct. 19.

Now,will the Pending home sales number be able to surprise us? for the MoM reading the expectation is for a 2.1% increase, at a previous reading the number was 2.6% negative. We need to remember that up to now the housing market has been the US economy's main driver.

Originally posted at www.77sigmatrading.com