EUR/USD edges higher after unexpected decline in Spanish jobless claims

The euro advanced on Tuesday against the US dollar, after the Spanish Ministry of Employment announced an unexpected decline in jobless claims.

EUR/USD reached a session high at 1.3593 at 13:44 GMT, gaining 0.38% for the day. The pair was trading at 1.3574 at 14:40 GMT. Support was likely to be met at November 26th low, 1.3521, while resistance was to be encountered at December 2nd high, 1.3616.

Spanish Ministry of Employment unexpectedly reported that the number of unemployed people in the country fell in November. Spanish jobless claims declined by 2 500 in November, compared to an increase by 87 000 claims last month. Projections were pointing to an increase of 49 300 in the number of jobless claims.

Meanwhile, Eurostat published its Producer Price Index (PPI), which indicated that producer price inflation in the Euro zone fell more-than-expected in October. The PPI for the Euro zone declined by a seasonally adjusted 0.5% in October, compared to expectations for a 0.2% decline. Producer prices gained 0.2% last month. A drop in energy prices influenced the overall decline in the PPI.

On yearly basis, the PPI declined at an annualized rate of 1.4% in October, compared to expectations of a 1% drop, after falling at a rate of 0.9% in September.

The (PPI) measures average changes in prices received by domestic producers for their output. It can be seen as a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. Usually a rise in PPI will lead in a short time to a rise in CPI and therefore to a rising interest rates and rising currency.

Meanwhile, the US Redbook Retail Sales index registered a 0.2% decline in the week ended November 30th, after a 0.5% decline the previous week.

The Institute for Supply Management reported yesterday that manufacturing growth in the U.S. accelerated to the highest in 2-1/2 years. The ISM Manufacturing index surged to 57.3, defying analysts’ projections of a decline to 55.0 from 56.4 in October.

The report showed activity in the manufacturing sector expanded for a sixth consecutive month and the overall economy grew for the 54th straight month. The new orders, production, employment and inventories sub-indexes also advanced, while supplier deliveries slowed.

The New Orders Index increased in November by 3% to 63.6 and the Production Index jumped by 2% to 62.8. The Employment Index came in at 56.5, an increase of 3.3% compared to October’s reading of 53.2. This reflects the highest level since April 2012 when the Employment Index registered a reading of 56.8. Supplier deliveries fell to 53.2 from October’s 54.7.

Investors will also be keeping a close eye on the upcoming release of crucial U.S. economic data to further gauge whether the Federal Reserve will commence scaling back its monthly bond purchases earlier than expected.

On Thursday, December 5th, the preliminary US GDP for the third quarter is expected to be revised upward to 3.1%, up from initially estimated at 2.8% in October.

On Friday, December 6th, the Labor Department will release the keenly anticipated data on non-farm payrolls and rate of unemployment for November. According to analysts’ projections, numbers will probably show that US employers added 183 000 jobs in November, compared to 204 000 in October. This will be the largest annual gain in payrolls since 2005. Meanwhile, the unemployment rate is projected to lower to 7.2%, the same rate as in September and the lowest since November 2008.

Elsewhere, GBP/USD hit a session high at 1.6437 at 11:47 GMT gaining 0.49% on a daily basis, after having reached 1.6442 at 00:25 GMT on Monday, or the highest level since August 2011. Support was likely to be received at December 2nd low, 1.6343, while resistance was to be met at August 29-th 2011 high, 1.6454.

USD/JPY hit a session high at 103.38 at 4:35 GMT, which is the highest level since May 23rd. At 08:15 GMT the pair is trading near 6-month highs to trade at 103.11, gaining 0.17% for the day. Support is likely to be received at December 2nd low, 102.23, while resistance is to be encountered at May 23rd high, 103.56.