Daily News Report

Markets in a Flash

• The USD is starting to look stronger this morning. It is gaining as investors seek less risk.
• The EUR/JPY appears to be trading very close to its monthly lows.
• US equity futures are lower today suggesting the selloff will continue when the markets open.
• Oil is trading just below the $86.00 mark while Gold is pushing higher to around $1200.00.
• Most Asian markets were up over night. The Nikkei posted gains of +0.44%.
• European equity markets started the day positive but have turned negative as trading has continued.

News focus

Eurozone Countries Show Strong Growth

German GDP data released this morning came in ahead of forecast with a 2.2% rise in Q2 compared with the previous quarter. France also reported GDP figures and showed a 0.6% rate of growth compared with a rate of 0.4% expected. These strong figures from two of the Eurozones major economies boosts investors confidence that the economic recovery in Europe is maintainable. The Growth in Germany has been helped along by the countries strong exports, which have been boosted by the weakness in the Euro. Germany’s GDP growth is their fastest since 1990 and is equivalent to 8% annualized.

0830ET – Consumer Price Index

CPI - M/M change

Previous -0.1 %
Consensus 0.3 %
Consensus Range -0.1 % to 0.4 %
Actual 0.3 %

The consumer price index has come in on consensus. This has shown that prices paid by consumers have risen this month after the fall in the previous month. This should not have a great impact on the markets as the consensus figure was probably already priced in.

0830ET - Retail Sales

Retail Sales - M/M change

Previous -0.5 %
Consensus 0.5 %
Consensus Range 0.2 % to 1.0 %
Actual 0.4 %

Consumer spending contributes heavily to GDP, so a rise or fall in retail sales can be a good indicator of what GDP is doing. The data released today shows a rise in retail sales which indicates a potential rise in GDP. This rise has come in slightly below consensus so should be a little bit bearish. This may indicate that the economic recovery is not happening as well as expected.

Coming up Today

0955ET – Consumer Sentiment

Previous 67.8
Consensus 69.0
Consensus Range 67.9 to 71.0

The index measures consumer’s financial positions and attitudes toward the economy. Today’s reading is the first of two due for August 2010. The figure dropped lower than previous last month but today’s data is expected to show a small rise. A reported figure below consensus or below previous will put bearish forces on the dollar and the US equity markets as it is an indication in a reduction in consumer spending.

1000ET – Business Inventories

Previous 0.1 %
Consensus 0.2 %
Consensus Range 0.0 % to 0.5 %

This is the measure of monthly change in the dollar amount of inventories held by companies. The data released today is expected to show a rise in inventory levels. As businesses restock and produce more inventories more labour must be used. This results in more jobs and more spending.