Friday 1st August 2008

All eyes on US Non farm pay rolls today

Gloomy new housing data released by the Nationwide Building Society yesterday reporting its ninth consecutive monthly fall. It also announced the largest year on year fall in property values since the early 1990s indicating the severity of the UK housing market can not be underestimated. UK PMI data is out today at 9.30 it is expected to show a drop to 45.5 from 45.8 in June showing further contraction.

The dollar experienced a big sell off yesterday after US weekly jobless claims came out lower then expected and further data was released showing the US economy grew less then anticipated in Q2. The Q4 figures have now been revised to show a contraction of 0.2% rather then the expansion of 0.6% as previously set. The Labour Department reported the number of US workers filing for unemployment benefits increased by 44,000.00 last week bringing the figure up to 448,000.00. GDP grew at a 1.9% annual rate, up from the 0.9% recorded in the previous three months, down from the level of 2% forecasted. The Commerce Department announced ‘for economic growth to pick up later in 2008 and in the years ahead, we must have good tax and energy policies.’ This also impacted on US stock which opened lower in the market yesterday. US non farm payrolls will be out at 13.30, the market median is expect to show a decline of 70,000-75,000. Following on from this data the ISM manufacturing data will out at 15.00.

This morning it was reported that German retail sales fell more then expected by 1.4% for the month of June with consumption, investment productions and exports all weakening for this period. Euro zone inflation escalated to another record high in July coming out at 4.1% year on year. The inflation level seems to be moving further away from the ECB’s target inflation level of 2%. This inflation level is the highest since 1997 and will leave the ECB with a tough judgement next week.

Oil fell to $124.08 per barrel yesterday; this has been the biggest one month fall for oil since December 2004 off the back of negative US data.

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