Jobless Claims Boost Confidence in U.S. Markets, while EU Debt Crisis Continues

By FXEmpire.com

Optimism returned to U.S. markets on Thursday after strong earnings from Cisco Systems Inc and better than expected jobless claims eased concerns over the outlook for the U.S. economy, nonetheless, investors remain cautious, as fears the European debt crisis is worsening continued to cast doubts among traders.

The U.S. Labor Department released the jobless claims for the week ending August 5, where jobless claims fell to 395,000 below expectations of 405,000, marking the lowest in four months, where the drop in jobless claims eased concerns over the outlook for the U.S. economy amid recent signs that suggested economic activities are slowing down.

The U.S. trade balance was released from the Commerce Department for June, where the trade deficit widened in June worse than expectations. Moreover, concerns continue to mount that the European debt crisis is spreading into major economies within the Euro Zone area, where traders are now speculating the debt crisis could hit France, the second largest economy in the Euro Zone area.

Stocks in the United States rebounded to the upside by opening on Thursday, where the Dow Jones Industrial Average was up by nearly 1.30% to trade around 10,857, while the S&P 500 index was up by nearly 1.25% to trade around 1135. European stock indexes were mixed before closing on Thursday, where FTSE 100 was up by nearly 0.60% to trade at 5037 and the DAX was down by nearly 0.15% to trade around 5605.

The U.S. dollar extended its gains for a second day against a basket of major currencies on Thursday, where the U.S. dollar index was trading at 74.77, compared with the opening level at 74.56. The Euro gained slightly against the Dollar, where the EUR/USD pair fell to trade at $1.4192, compared with the opening level at $1.4136, and the British Pound rose back against the Dollar, where the GBP/USD pair traded around $1.6197, compared with the opening level at $1.6111.

Gold prices dropped on Thursday after rising to a new record high above $1800 an ounce on Wednesday, as gold dropped to trade around $1763 an ounce, and crude oil prices extended the rise to trade around $82 a barrel.