U.S. New Home Sales Record Biggest Drop in Nearly 18 Months

While most investors focused on the European Central Bank’s monetary policy decision, the World Economic Forum in Davos, Switzerland, U.S. Treasury Secretary Steven Mnuchin’s negativity toward the U.S. Dollar and President Trump’s pep rally for the U.S. Dollar, there were several U.S. economic reports.

Weekly Unemployment Claims

On Thursday, the U.S. Labor Department reported that the number of Americans filing for unemployment benefits rebounded from a 45-year low last week, though by less than expected, pointing to tightening labor market conditions.

Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 233,000 for the week-ended January 20. Economists had forecast claims rising to 240,000 in the latest week.

The U.S. Dollar was largely unchanged against a basket of currencies after the data. Prices of U.S. Treasuries were trading mostly weaker, while U.S. stock index futures were higher.

New Home Sales

The Commerce Department said on Thursday that sales of new U.S. single-family homes fell more than expected in December, recording their biggest drop in nearly 1-1/2 years. According to the government, new home sales declined 9.3 percent to a seasonally adjusted annual rate of 625,000 units last month. The percentage decrease was the largest since August 2016.

November’s sales pace was revised down to 689,000 units, still the strongest performance since July 2007, from the previously reported 733,000 units.

Conference Board Leading Index

The Conference Board Leading Index came in at 0.6%, higher than the 0.5% estimate and last month’s 0.4% previous read.

 

Gold

Gold rallied to its highest level since August 2016, fueled by another plunge in the U.S. Dollar. The market gave back some of its gains when the dollar rebounded in response to hawkish commentary from President Trump. Fueling demand for gold were dovish comments from the U.S. Treasury Secretary and hawkish comments from European Central Bank chief Mario Draghi.

Crude Oil

U.S. West Texas Intermediate crude oil futures gave back earlier gains to finish lower on Thursday. Volatile swings in the U.S. Dollar weighed on crude oil prices after the WTI futures contract flirted with the $67.00 level and the Brent futures contract neared $71.00.

Traders expressed concerns over high supply, rising U.S. production and worries over future demand.