MORNING BRIEFING: US job losses rise in June, Jean-Claude Trichet sets pessimistic tone; dampened hopes of an economic recovery

[RTFX-Trading]

MORNING BRIEFING: US job losses rise in June, Jean-Claude Trichet sets pessimistic tone; dampened hopes of an economic recovery

What’s new?
Euro zone: Oracle plans to cut 1,000 jobs.
United States: 467'000 jobs lost in non-farm sector.
United States: Unemployment rate up to 9.50%.
United States: Factory orders increase to 1.20% in May.
United States: Weekly jobless claims lower to 614'000.
Sweden: Lower interest rates and loans of up to one year for banks.
Euro zone: May unemployment reaches highest rate in 10 years.
Moody’s: Lowered its rating for the Irish Sovereign note to AA1.
Switzerland: Rumors of intervention by the SNB.

Today:
09h15 Switzerland: CPI M/M June, exp 0.10%, previous 0.20%.
09h48 France: PMI Services June, exp 47.5, previous 48.3.
09h53 Germany: PMI Services June, exp 44.3, previous 45.2.
09h58 Euro zone: PMI Services June, exp 44.5, previous 44.8.
10h00 United Kingdom: Halifax House Prices index M/M June, exp -0.70%, previous 2.60%.
11h00 Euro zone: Retail Sales M/M May, exp -0.10%, previous 0.20%.

Overnight Rates and Indices:
EURUSD: 1.4005 – 1.3928.
USDCHF: 1.0902 – 1.0843.
GBPUSD: 1.6399 – 1.6326.
EURJPY: 134.45 – 133.58.
USDJPY: 96.07 – 95.70.
DowJones: 8'281 -2.63%.
NASDAQ: 1’797 -2.67%.
S&P 500: 896 -2.91%.
Nikkei: 9’768 -1.09%.
Gold: $932.40
Crude Oil: $66.74
 
Comments:

The pessimistic tone used in the press conference by the President of the European Central Bank Jean-Claude Trichet regarding the Old Continent’s economy and the publication of American employment figures which showed a rising unemployment rate have pushed the stock market lower, causing a drop in "carry trades".

   
The number of job losses in the United States reached 467'000 in June, against 363'000 expected by the market and 345'000 in the previous month. The unemployment rate reached 9.50% in June compared to 9.40% in May. The increase in Factory Orders to 1.20% in May, the highest rise in a year, was not enough to reverse the trend.
   
The European Central Bank left its rates unchanged at 1%. This decision was taken unanimously. Mr. Trichet reiterated that the current level of interest rates is not the lowest that we could achieve in any circumstance. The market has interpreted this statement as a possible rate cut by the end of the year. The declaration on annual inflation rates that should be kept temporarily in negative territory in the coming months and then become positive was also considered negative for the single currency. The lowering of the Irish Sovereign note by Moody’s also weighed on the Euro yesterday.
   
Regarding the Swiss franc, new rumors of intervention by the Swiss National Bank are re-surfacing. Thomas Jordan an SNB board of director’s member said the SNB was ready to continue its intervention in the foreign exchange market to combat unwanted increase of the Swiss franc.
    
US financial markets are closed today, the eve of American National holiday, July 4th. The market is expected to consolidate yesterday’s volatile day. The EURUSD is expected to remain within a range, between 1.3925 - 1.4075.

Good day and have a nice week-end.

Emman Xuereb
RTFX Ltd
Head Office

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