After a turbulent week the markets are calming down for a moment
Investors and traders might have been flailing around yesterday trying to follow the latest twists and turns in the unfolding Greek tragedy but they can take comfort – if that’s the right word – that their Leaders at the G20 Summit in Cannes were in exactly the same position. By this morning the picture is somewhat clearer; there will be no referendum in Greece, the euro will survive intact and we might, at some point soon, get back to concentrating on economic fundamentals.
In this respect at least, relief that imminent disorderly collapse has been avoided has seen a more positive attitude towards risk. Asian stock markets are generally up between 2 and 3%, with the Hang Seng Index only a few points shy of the magic 20,000 mark. The Single European Currency is back above USD1.38 and the pound once more buys 1.60 dollars.
How long this mood lasts may depend on today’s data. First up will be the European PMI services numbers. New ECB President Mario Draghi referred several times at his Press Conference to the Purchasing Managers Surveys and the likelihood that these were signalling a ‘mild recession’ across the Continent. Indeed, it was this assessment that caused the Governing Council to vote unanimously for a 25bp rate cut. Consensus looks for Germany to show a reading still above 50 but with France and Italy struggling, the overall EU number is expected at just 47.2.
There are no scheduled UK data releases today and whilst “no news is good news” in the current environment, markets still have to contend with the latest US labour market report.
The average increase in non-farm payrolls in each of the last 6 months has been just 103,000; barely enough to keep pace with demographic change. This explains why the unemployment rate has been stuck firmly above 9% and is once again expected to be unchanged at 9.11% in October. And, whilst the 6 month average is still above 100k, this is mainly because April’s 217k increase is still in the calculation.
The two US ISM Surveys already released this week and the ADP Survey of private sector employment are all consistent with an increase in the official payroll number of somewhere between 100-120k though, as ever, there’s often much interest and information in the revisions to previous months’ data.
Once these numbers are released at 12.30 London time (the clocks in the United States will be adjusted this weekend), there are no more data releases scheduled for the afternoon. The focus of attention, instead, will be on leaks, briefings, rumours and communiqués from the G20 Summit.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.