Daily Market Report - 16/10/2015

U.S. consumer prices recorded their biggest drop in eight months in September as the cost of gasoline fell, but a steady pick-up in other  price pressures should calm fears that a dis inflationary trend was reasserting itself.

Consumer Price Index fell 0.2 percent last month after slipping 0.1 percent in August. In the 12 months through September, the CPI was unchanged for the first time in four months after rising 0.2 percent in August. Last month gasoline prices fell 9.0 percent  the biggest drop since January after declining 4.1 percent in August. Food prices increased 0.4 percent, the largest increase since May 2014.

The number of Americans filing new applications for unemployment benefits fell back to a 42-year low last week, suggesting the labor market remained strong despite an abrupt slowdown in job growth in the past two months. Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 255,000 for the week ended Oct. 10.Claims were last at this level in July, which was the lowest since November 1973.

We also had poor manufacturing figures in the US with  the Empire State manufacturing index, which measures conditions in the New York area, stayed in deep negative territory for the third month in a row  the Philadelphia Fed’s manufacturing index also remained in negative territory for the second straight month.

U.S. manufacturing has been struggling since last fall as the strong dollar has made products less competitive in the global market. While effects of the strong dollar in 2014 is still weighing on the sector, the dollar has risen sharply against several currencies since August due to concerns about the health of emerging markets such as China.

Key Announcements
13:30 – EUR: Consumer Price Index (YoY) expected to fall remain unchanged at -0.1%