Today is the first Friday of the month, so all aboard the good ship Payroll, as US jobless figures are released this afternoon amid the usual scrum of forecasts and media hype.

See the bottom of this blog for the US Non Farm Payroll results…

But it is an important data release, and the Dollar is treading water against the Pound and Euro until we get to see the numbers after lunch.

The consensus is for a third consecutive month of decline with -105K jobs lost, and an unemployment rate of 9.6 percent, still stubbornly high given the impressive pace of job creation in March and April.

The figure was made even more important in light of the surprisingly good ISM figure earlier in the week, and continuing with the naval theme, should give us a clue as to when QE2 may dock over in the US.

The ECB left rates unchanged at 1% yesterday, as expected in light of the better than expected GDP performance in the second quarter of this year and the high levels of confidence indicators during the summer.

They also revised upwards its growth forecast ranges for 2010 from 0.7%-1.3% to 1.4%-1.8%. Nevertheless, President Trichet remained cautious and said that the ECB expects the pace of economic growth to decelerate over the second half of the year. The ECB also announced that they have extended emergency lending measures for banks into 2011, remaining in crisis mode due to the risk of a renewed U.S. recession putting the euro-area’s rebound in jeopardy.

This morning ECB governing council member, Nowotny, said that any ECB exit (from the current QE stance) would start with liquidity, followed by collateral quality and finally, interest rates. The Euro’s value was mostly unaffected.

The slow decline of Sterling over the past week continued yesterday as a report showed U.K. house prices slid the most in six months in August. Data from the Nationwide Building Society showed that the average home price dropped 0.9 percent from July. Another report also showed that an index of British construction fell last month to the lowest since February.

Non-Farm Payrolls Update

The US job data has been released and has come in much better than expected. Payrolls fell 54,000 much better than the expected drop of 105,000.

In CFDs we have seen a bounce in equities as a result and some unwinding of USD and JPY strength on the back of the data.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The US economy grew by just 0.3% over the same three months.

A different two-cent range and a different outcome took sterling lower but only on the second attempt. Last Monday’s two lost cents had been recovered by Thursday morning. It was not until London took the bank holiday Monday off that the longer-lasting damage was done.

In a week otherwise bereft of useful UK statistics Friday’s first revision to second quarter gross domestic product (GDP) took centre stage. Having initially estimated quarterly growth of 1.1% the Office for National Statistics upgraded its guess to 1.2%. Surprisingly, there was a negative reaction to the good news. The sell-off was only brief but it was enough to demonstrate the market’s confusion about sterling. It is almost as if investors saw the strong GDP figure as a sort of economic swansong. They believe the chancellor’s austerity budget will weigh on the economy and that the numbers will get worse; they just don’t know by how much.

If spread trading investors are in two minds about sterling they are equally confused about the US dollar. We had become used to the idea that bad news for the global economy meant good news for the safe-haven dollar and yen. On Tuesday that link appeared to snap. It was announced that existing (as opposed to new) home sales had slumped by 27% in July, with sales running at annual rate of just under four million. With just over four million homes on estate agents’ books it means a 12-month overhang of unsold second-hand real estate. As one would normally expect, the horrid news sent investors scurrying for safety but they went for the yen, not the dollar. It was the same pattern for the rest of the week. Not until this Monday did the dollar show signs of recovery. Even then it was not clear whether the rebound marked a return to form or was just a fluke.

CFD investors looking for bad US economic news did not have to content themselves with the fall in existing home sales. They found plenty more ammunition among the ecostats. The Richmond Federal Reserve’s manufacturing index fell by five points to 11. Durable goods orders went up by only 0.3% in July; excluding transportation items (trains and boats and planes) orders were down by -3.8% on the month. New home sales fell by more than 12% for the second month running. The week’s toughest call for the dollar should have been Friday’s second quarter GDP figures. The previous estimate of 0.6% quarterly growth was revised down to 0.3%. In the event, the dollar received only mild punishment, perhaps because investors were relieved the figure was not worse.

Sterling and the dollar both face challenges this week from the purchasing managers’ indices, an important barometer of how the manufacturing and services sectors are performing. For the dollar the biggest test of the month comes with Friday’s employment data, specifically the change in non-farm payrolls. Last month’s figure was a disappointment and this latest one will probably not be much better. What will be instructive is how the market reacts to an off-target number. Are we back to normal, buying the dollar on bad global economic news, or are weak US numbers now a reason to sell? Until we find out, the safest risk management strategy is (as is so often the case) a hedge.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

The highlight overnight was the release of the minutes from the August 10th Federal Reserve Open Market Committee meeting.

Some Federal Reserve officials were concerned that a decision to keep securities holdings unchanged would inadvertently signal an intention to resume large-scale asset purchases.

Also, a few policy makers said the economic effects of the decision “would be quite small,” but at the same time, some officials saw “increased downside risks to the outlook for both growth and inflation” and voiced concern that further shocks would cause “significant slowing in growth”.

The debate shows the challenge Fed Chairman Ben S. Bernanke may face in achieving consensus for any additional monetary stimulus to reverse a slowdown in growth and reduce joblessness more quickly. In a speech last week, Bernanke said “Policy makers haven’t agreed on specific criteria or triggers for further action”.

In other important US economic releases, we had the Conference Board’s confidence index yesterday afternoon which showed that confidence among U.S. consumers rose more than forecast in August; a sign the biggest part of the economy may avoid a slowdown that would derail the recovery.

The Conference Board’s confidence index increased to 53.5 from a five-month low of 51 in July, figures from the New York- based private research group showed. More confidence may help ease concern that consumer spending, which accounts for about 70 percent of the economy, will falter.

As we approach the ECB meeting this Thursday, yesterdays Eurozone annual inflation reading fell from 1.7 in July to 1.6 in August, coming in well under the ECB’s target of 2%. Inflation looks set to remain muted for the rest of 2010 and into 2011 as European governments implement austerity packages to shore up their sovereign balance sheets.

Yesterday we also saw German unemployment continuing to fall, for the 14 month in a row, slightly better than expected sparking a rally in the Eur/Usd CFDs market which provided strong support going into the release of the Fed’s minutes. Investors had been keenly anticipating the release of these minutes but were somewhat disappointed as it lacked any new information triggering another move higher for Eur/Usd.

The UK spread trading market was largely subdued as the long bank holiday weekend took its toll. Sterling, although firm at opening, declined during the day on what appears to have been the regular end of month demand for Euro/Sterling. Today, we are scheduled to get PMI manufacturing data from Germany, the Eurozone, the UK and the ISM manufacturing numbers from the US giving us the first test of the relative performances West v East.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Global markets are in the doldrums and with decreased trading volumes and a lack of positive data there has been little to prevent a downward path this week.

The Dow is down 2.23% on the week and just over 6% on the month, slipping below the critical 10,000 level (closing yesterday at 9,985).

S&P and Nasdaq have followed suit heading into the end of the month 6.7% and 6% down on the month.

In the UK CFD market, the FTSE clawed back from the 6 week low of 5070 seen on Wednesday but is still 3.50% down on the month. In Asia, the Nikkei and Hang Seng haven’t bucked the global trend also down 5.5% and 2% on the month.

Yesterday the Labor Department in the States reported a reduction in new U.S claims for unemployment benefits. Initial claims for state unemployment benefits fell 31,000 to a seasonally adjusted 473,000, below market expectations for a drop to 490,000.

However this figure did little to support the dollar as firstly the claimant’s number still remains high and there is still a real concern about the recovery of the States after the horrendous week it has had.

Many economists also look at the four week average price of initial claims which is viewed as a better gauge of employment trends; this figure was up slightly by 3,250 from 486,750.

Despite the onslaught of poor data Germany continues to shine as German consumer morale increased for the third month running, hitting its highest level since last October. German CPI data is also due out this morning and if it follows the positive trend we may seen the reading come out ahead of expectations however seasonal trends suggest August CPI readings are usually low.

Euro Zone money supply growth held steady in July as loans to the private sector steepened. The Conference Board’s leading economic index for the Eurozone (which is used to identify turning points in the business cycle of the Euro Zone) rose by 1% to 112.5 in July.

The European Central bank reported loans to the private sector grew at a annual rate of 0.9% up from 0.5% rise in June.

Today should be an interesting day in the financial spread betting markets with GDP readings from the UK and US coupled with Bernanke speaking this afternoon. UK GDP Q2 2nd release is expected to be unchanged at 1.1% and US GDP Q2 2nd release is expected to be revised down slightly to 1.3%.

This afternoon all eyes will turn to Bernanke who is speaking at a conference at 3pm (GMT) at the Economic Symposium in Jackson Hole, Kansas. It is anticipated that Bernanke will revise down the US 2nd quarter economic growth figure at this annual conference. The recent flow of disappointing data from the States has fuelled fears of a double dip recession. Gold has edged higher this week to current levels of 1236 per ounce (Gold has surged this month as investors seek safe havens and is up 4.80% on the month).

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Sterling’s progress was far from directionless last week. It covered its two cent range – or at least most of it – six times. But it did not go anywhere.

In the CFDs market Sterling opened in London yesterday morning within a quarter cent of last Monday’s departure point.

Thursday morning’s positive performance was more clearly founded. Public sector net borrowing in July was £3.2 billion, two billion lower than forecast and less than a quarter of the previous months shortfall. Retail sales rose by 1.1% in the month instead of the 0.4% analysts had predicted. But the euphoria evaporated quickly after The United States delivered another set of duff data. Sterling had to give back in the afternoon what it had won in the morning.

The US data included very little to reassure investors over their recently-reawakened fears of double-dip global recession. A tolerable start on Monday saw the New York Federal Reserve’s manufacturing index improve by one point to 7.1 but it was a lousy finish on Friday when their colleagues in Philadelphia reported a 13-point drop to -7.7, signifying falling activity.

Residential real estate remains a problem area. Housing starts were steady in July but building permits were down again. The National Association of Homebuilders reflected the problem in their housing market index. It went down to a measly 13, the lowest level since March last year despite the NAHB having spent $600k on lobbying in the second quarter of the year.

Perhaps the most disappointing figure was the half million new claims for jobless benefit the week before last. The number was not a lot higher than the previous week’s 488k claims but the big round number was psychologically painful.

The only really dollar-positive factor was the weaker tone of economic statistics from around the world, including the United States. Investors worry that the global recovery might not have the horsepower to pull away from the black hole of recession.

For every good number here they can see a bad one there. In such a mood they are less likely to embrace risk, more likely to seek the security of a safe-haven currency such as the Japanese yen (last week’s best performer) or the US dollar.

In the financial spread betting market a week ago the pound was caught in a two-cent range, hemmed in by technical resistance to the upside and technical support to the south. Nothing has changed.

Although that support has turned out to be more robust than it originally seemed, until sterling either rebounds from or sinks through that level its future direction can be no more than a guess.

CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Sales of previously owned US homes dropped more than expected in July to their lowest pace in 15 years implying further loss of momentum in the States economic recovery.

The record drop of 27.2% from June equates to an annual rate of 3.83 million units which is the lowest level since May 1995 and June’s sales pace was revised down to a 5.26million-unit pace.

The CFDs markets had been anticipating a tumble of around 12% and so were shocked with the magnitude of this figure.

In the forex spread trading markets, the USD dropped significantly against the JPY following the news to a new 15-year low of around 83.60. This prompted more verbal intervention from Tokyo but made little impact however as investors continue to sell USDJPY and are now focusing on the all time lows of 79.75 from 1995.

Investors ploughed money into government bonds, driving down the implied cost of borrowing to record lows in Britain and Germany. The UK 10 year gilt yield fell to 2.88% which is even lower than that of March 2009 when the BoE announced that it would buy billions of gilts under its quantitative easing scheme. US 10 treasury yields broke below 2.5%. Oil followed suit and fell below $72 a barrel yesterday, down for a fifth day after weak US economic data spread gloom about the ability of the US, oils top consumer, to work through record stocks.

These ripples of doubt ran across the globe and caused equities to close down; Britain’s top share index closed lower with UK banks, miners and energy stocks bearing the brunt of the sell-off. The FTSE ended down 78.89 points (1.5%) at 5,155.95 which is its lowest close since 20th July and unwound the gains of 0.8% which we had seen on Monday.

Chief executive of fund manager Jupiter, Edward Bonham Carter, was trying to make sense of all of this data yesterday and predicted that equities will be range-bound for the next three to five years, but with significant bouts of volatility in between. #

This has sparked chat about a new animal metaphor coming into play…forget your bulls and bears we are now talking about hippos! Apparently the hippo is considered the animal half way point between bull and bear… the animal that lies around in the mud doing little for a lot of the time but whose occasional bouts of activity can surprise people. They are also pretty dangerous when they want to be!

Article written by currenciesdirect.

None of the above information constitutes, nor should be construed as financial advice.

The newest member of the Bank of England’s rate-setting Monetary Policy Committee hit the headlines this morning.

Britain faces “significant” risk of a fresh slump into recession according to Dr Martin Weale, who said it would be “foolish” to rule out the possibility of a double-dip downturn.

He also thought the Banks central outlook on growth could be too optimistic in light of the fiscal cuts currently being implemented. The BoE forecast is for growth of about 2.8% in 2011 and 3.2% in 2012.

Sterling has dropped over a cent against the Dollar following the news and has traded as low as $1.5371.

M&A activity in the US, helped lift sentiment yesterday, unfortunately this did not last for long and both main stock indexes closed marginally down on the day.

There is little economic news again today so focus is likely to remain on the existing home sales in the US which is out this afternoon at 15:00.

Figures are expected to show that sales of existing US homes fell to an annual rate of 4.67 million in July from 5.37 million in June. There is also housing data due out tomorrow which is due to show that sales of new homes rose to 340,000 from 330,000 in June.

In Europe we have seen data from the Federal Statistics Office this morning confirm that German GDP grew 2.2% in the second quarter compared with the previous three months, which is actually up 4.1% on the year.

The news provides yet further evidence of the strength of the recovery in Germany whilst other countries in the Eurozone still falter.

Yesterday consumer confidence in the Eurozone and the European Union improved slightly in August according to figures from the European Commission.

The figures rose to -11.4 from -13.8 for the 16-country currency area and beat expectations of -12.8 although this data release went relatively unnoticed in the markets and did not impact on the Euro.

Article written by currenciesdirect.

None of the above information constitutes, nor should be construed as financial advice.

Reports today suggest FX analysts are the most pessimistic on the Pound since May 2009, predicting the Chancellor’s cuts will eat into economic growth.

The already soft economic recovery is forecast to slow causing Sterling to fall back against both the Dollar and Euro.

Median estimates suggest the Pound will drop 8 per cent against the Euro by year end as the recent bullish UK data starts to deteriorate.

The US Dollar rose sharply on Friday against the Euro, Sterling and the Australian and Canadian Dollars on the back of risk aversion, while safe haven currencies such as the Swiss Franc and Yen strengthened against the Dollar.

The Fed is perceived by the markets to be in a holding pattern until further directional economic data is released.

Weakness in global equities carried through to European markets sending major indices lower while US stocks are lower as the sell off continued. The current lack of Tier 1 economic data out of the US is putting the focus on the equity markets.

The Euro fell against a basket of currencies on Friday and remains on the defensive this morning as comments by a senior ECB official fuelled expectations for liquidity to remain a concern for the single currency.

ECB Governing Council member Axel Weber told Bloomberg in an interview published on Friday it would be “wise” to extend unlimited liquidity to banks past the end of 2010. The Euro was further hit after the US Federal Reserve said the US and global economic recovery was losing steam, striking a nerve with investors.

The Eurozone is seeing an increasing split not only in banking but in the economy in general. While the Eurozone economy improved in the second quarter with Germany setting the tone, southern Europe recorded much more muted growth.

Market analysts believe the ECB may have little option but to keep flooding the money market with cash to help banks and governments in the EU.

The Eurozone economy will remain under the spotlight today with the release of the flash August Eurozone PMI’s which are expected to fall back from 56.7 in July to 55.5.

In the US the focus will be on the release of housing and labour market figures. On Friday of this week the focus will be on the UK with the release of Q2 GDP growth figures.

Article written by currenciesdirect.

None of the above information constitutes, nor should be construed as financial advice.

Gilts opened lower and Sterling remained on the back foot on Thursday morning ahead of UK Public finances and UK retail sales.

The market continues to be concerned about public sector debt so any poor data was expected to see the market react abruptly as investor’s fear the UK government will struggle to meet its target for narrowing the deficit this year.

However, unexpectedly, retail sales actually rose three times faster then had been predicted in July. The Office for National Statistics said retail sales rose 1.1% on the month, the strongest growth since February 2010 and well above analyst forecasts for a 0.4 % rise. On the year, retail sales rose 1.3 %, again above forecasts of 0.6 %.

There was also a sharp improvement in Public Finances mainly driven by strong growth in tax receipts. The Treasury were quick to react after seeming concerned that this figure would be interpreted as more positive for future budget forecasts and they announced that their figures were still in line with the Office for Budget Responsibility full forecast. Sterling strengthened off the back of these figures and moved 1% higher against the Dollar and 0.5% against the Euro.

The UK managed to start the day off on a positive note but unfortunately the States were unable to continue this trend. U.S unemployment claims spiked to a nine month high. The Labour Department reported initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000, the highest since mid-November.

The Dollar came under further pressure after factory activity in the US Mid-Atlantic region fell in August to -7.7 from 5.1 in July reported by the Federal Bank of Philadelphia on Thursday. This reading was the lowest reading since 2009.

The Dollar fell further against the Yen and nearly touched the 15 year low we saw earlier on this week as investors continue to remain apprehensive about the pace of the US economic recovery. Obama spoke out yesterday urging the Congress to push legislation to force tax cuts and ease credit for smaller businesses.

Gold benefited yesterday as investors flocked to safety. Gold looks set to climb higher and closed yesterday up at $1235.40. Conversely, Brent Crude Oil slumped by 1% to close at $74.40 as uncertainty in the US may signal lower demand.

Other news in the headlines includes a slew of takeover activity as companies eye up targets. There will be ongoing coverage of BHP’s now hostile takeover bid for Potash. BHP will begin the hard sell of the $40bn hostile bid to their own shareholders next week at road shows across the globe.

It wouldn’t come as a surprise if BHP increase their bid after Potash rejected it and due to the likely scenario of a rival bidder entering the market. BHP could probably hike their offer to as much as $165/$170. Analysts have tipped Brazil’s Vale and rival Chinese and Russian firms to be on the sidelines.

Other M&A activity includes Intel’s announcement that it will buy McAfee for $8bn and the $2.9bn hostile bid launched by Korea National Oil Corp for UK explorer Dana Petroleum after it’s takeover offer was rejected. No doubt we will get more stories about this flurry of hostile M&A activity over the weekend.

Today is a quiet day with only Canada’s CPI date for July out at 12.00.

Article written by currenciesdirect.

None of the above information constitutes, nor should be construed as financial advice.

Such is the way in FX markets at the moment, no sooner had Sterling been given a boost, rising almost 1 cent against the Dollar yesterday on the back of the Bank of England minutes, than it gave up almost all the gains overnight in the Asian session.

Déjà vu on Thursday, the Pound is again up almost one cent after very strong retail sales and public sector net borrowing figures. Retail sales including auto fuel rose 1.1% month-on-month against a forecast of 0.3%, with the year–on-year number is now 1.3% against an estimate of 0.6%.

The strong numbers were driven in particular by non store and other store retailing, producing year on year increases of 6.1% and 16.4% respectively. Public net sector borrowing data is also fuelling Sterling’s rise as figures released at the same time at retail sales show the Governments net borrow was lower than forecast, £3.17bn versus a forecast of £4.8bn.

The tightest fiscal squeeze since World War Two looks to be taking hold, and the markets like what they see thus far.

German Producer Prices posted another increase this month, showing gains 0.4% higher than forecast at 3.5% yoy. The PPI data affirming the strong GDP growth figures released last week and helping to shrug off the disappointing ZEW economic sentiment figures earlier in the week.

A lack of data from the Eurozone this week means the Euro is being driven by news flow from the other half of the pairs, but with the bond auctions on Tuesday passing without incident we can expect an unnatural degree of calm, in comparison to recent months, going into the weekend.

This afternoon sees the release of the Philadelphia Fed survey covering business conditions and production which is closely watched in the currency markets.

Given the recent glut of disappointing data release we expect the survey to confirm the general slowdown in economic recovery. Also released are initial jobless claims and continuing claims.

Article written by currenciesdirect.

None of the above information constitutes, nor should be construed as financial advice.