MORNING BRIEFING: A much better than expected US job report results in a sharp rise in the Dollar and "carry trades".

[RTFX-Trading]

MORNING BRIEFING: A much better than expected US job report results in a sharp rise in the Dollar and "carry trades".

What’s new:
United States: Employment report much better than expected.
United States: Sharp decline in consumer credit in June.
Germany: 10% drop in industrial production in June.
Germany: Largest surge in export in nearly 3 years.
United Kingdom: Producer price index down 1.30% in one year.
Euro zone: Purchase of assets by ECB just over €5B.
Zone euro : ECB President Trichet remains cautious on the economic situation.
Switzerland: Unemployment rate at 3.70% in July.

Today:
08h45 France : Industrial Production M/M June, exp 0.00%, previous 2.60%.
16h00 United States: Employment Trends July, previous 88.4.

Overnight Rates and Indices:
EURUSD: 1.4217 – 1.4168.
USDCHF: 1.0827 – 1.0800.
GBPUSD: 1.6718 – 1.6665.
EURJPY: 138.61 – 137.81.
USDJPY: 97.73 – 97.07.
DowJones: 9'370 +1.23%.
NASDAQ: 2’000 +1.37%.
S&P 500: 1’010 +1.34%.
Nikkei: 10’546 +1.29%.
Gold: $955.60.
Crude Oil: $71.08.
 
Comments:
   
Wall Street closed higher Friday on a steady increase; investors welcomed the encouraging employment figures from the United States. On Friday, the US Labor Department reported 247’00 job cuts for the previous month, while specialists were anticipating -320'000 job losses on average. The unemployment rate was given at 9.40%, while the consensus was 9.60%. The number of job cuts in July was the lowest since August 2008 and the unemployment rate fell for the first time since April 2008.

These figures indicate a further sign of economic stabilization in the United States, indicating that the period of low interest rates could come to an end. Confidence and consumer spending should follow, which should lead to an appreciation of the Dollar. The United States should exit faster than others from the recession.

Wednesday, the statement which follows the FOMC meeting will be extremely important. The market is expecting a more optimistic tone about growth than the previous meeting. The general feeling is also that the program of asset purchases will not be extended beyond the planned $ 399B. The statement should also declare the intention of the FED to keep interest rates exceptionally low for an extended period of time.

Have a nice week.

Emman Xuereb
RTFX Ltd
Head Office
The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
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