"We have not changed policy. We are not tightening policy,"
- Federal Reserve Chairman Ben S. Bernanke
A bunch of better-then-expected data from the U.S. was released on Thursday, raising speculations of a possible QE tapering later this year. Figures from the Labor Department showed that the number of initial jobless claims fell by 24,000 to a seasonally adjusted 334,000 in the week ended July 13. The majority of economists, however, expected a figure of 345,000. The less-volatile four-week moving average turned lower as well, falling to 346,000 from the last week's 351,250. As the firing slowed down, it should lay the groundwork for a pickup in hiring, as the effects of sequester wane.
In a separate report the Federal Reserve Bank of Philadelphia showed that manufacturing sector in Philadelphia expanded more than expected this month, adding to signs of an improving outlook for the whole industry. A gauge of manufacturing activity jumped to 19.8 in July, the highest level since March 2011, and up from 12.5 a month earlier.
Another important event on Thursday was the second day of Bernanke's testimony, where he pointed out that the monetary policy will stay loose for the foreseeable future. He also said that short-term borrowing costs will remain near zero level even as the jobless rate fall below 6.5%, especially if decline will be led by people leaving the workforce.
© Dukascopy Bank SA