Equities and commodities were higher in the Thursday trading session as we continue to have the spillover effects and positive risk sentiment from the Fed’s decision yesterday to keep interest rates steady for longer.

In regards to the US economy we had three key releases today, showing manufacturing orders coming in better than expected while jobless claims and new home sales – key indicators for the labor market and the housing – were softer than expected.

These three reports give us a nice view into the 3 key sectors and the current momentum in the US economy. If housing can join the better data seen the manufacturing sector as well as an improving labor market that could help sustain the US recovery.

Durable Goods Stronger Than Expected, Boosting Sentiment

In the New York trading session stocks were boosted by a stronger than expected durable goods orders report which bodes well for the manufacturing sector.

From Bloomberg: “Orders for U.S. durable goods rose more than forecast in December, led by demand for aircraft, autos and business equipment that signals further manufacturing gains.

Bookings for goods meant to last at least three years climbed 3 percent after a revised 4.3 percent gain the prior month that was more than previously estimated, data from the Commerce Department showed today. Economists projected a 2 percent increase, according to the median forecast in a Bloomberg News survey. Demand picked up for machinery, metals and communications equipment.

Gains in consumer and business spending, coupled with lean inventories, may keep driving production in coming months and spur the expansion. Sustained demand from China, Brazil and other emerging economies may also help shield U.S. factories from a slowdown in Europe stemming from its sovereign debt crisis.

Jobless Claims to 377K Pace

Jobless claims rose to 377K the previous week keeping up the recent volatility seen in the indicator during the December and January period. The 4-week moving average continues to point downward. We would need to see jobless claims fall below the 350K level to sustain a sharp pickup in employment. While it’s positive that claims came in below the 400K area that is only consistent with adding enough jobs to match the new entrants into the labor force, but is it not enough to cut into the large pool of unemployed as a result of the Great Recession.

New Home Sales Continue Sideways Momentum

The new housing market saw its first deceleration in the new home sales in the last five months, with new home sales showing a 307K annualized pace in December.

The FOMC has continued to conduct a loose monetary policy in an attempt to boost demand for housing and while existing home sales have picked up of late, new home sales continue to bounce along the bottom established in the middle of 2010. The price of new homes continues to fall, down 2.5% y/y.

However, if housing – which has dragged over the last three years – is able to join in with the momentum seen in manufacturing and the labor market – that would help support the overall US economic recovery.

Following the home sales data, stocks eased off their highs, unwinding the gains seen after the durable goods data. This caused a retracement in riskier currencies, though mainly against the JPY, as the USD continued to remain pressured.

Nick Nasad is the Chief Market Analyst at IBTrade and FXTimes  - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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