REUTERS : “Liquidity moves to the skies”

Currencies Direct August 27th 2010 - 2 minute read

REUTERS : “Liquidity moves to the skies”

 

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 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 Labour 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 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).

 

Report by Philip Ryan
at Currencies Direct

Written by
Currencies Direct

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