Fundamental Analisis By InstaForex

[IFX Darika]

Pace Of Deterioration In U.K. Job Market Slowing: CIPD/KPMG Survey

The pace of deterioration in the U.K. job market is slowing as private sector demand for staff began to stabilize following a surge of redundancies earlier in the year, results of the latest quarterly CIPD/KPMG labor market outlook survey revealed Monday.

The survey of more than 900 employers in all sectors of the economy found that not only are far fewer employers expecting to make staff redundant but the scale of planned redundancies has also reduced. However, signs of improved employer optimism in the private sector are offset by mounting pessimism in the public sector.

"When it comes to the immediate jobs outlook, the best that can be said is that things are getting worse more slowly," John Philpott, chief economist at the CIPD said. But, he warned that "It is far too soon to rule out another avalanche of private sector redundancies later in the year." According to the survey, employment will keep falling and unemployment is still on course to top 3 million in 2010. Due to a fall in expected redundancies, the private sector unemployment would be less compared to the public sector.

The balance of private firms cutting over those recruiting fell to minus 2 from minus 30 recorded in the spring. By contrast, in the public sector the negative balance has increased from minus 3 to minus 28.

Moreover, the survey found that the pay outlook has worsened, with only 15% of respondents planning to conduct a pay review this quarter, compared to 32% in the previous quarter.

Andrew Smith, chief economist at KPMG said, "This conservative approach indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term."

Average pay increase expectations have dropped below the rate of inflation to 1.7%. Smith said this will result in a reduction in real earnings and could stifle any consumer led recovery.

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[IFX Svetlana]

European Currency Climbs To 13-day High Against British Pound

Tuesday, the European currency rose to a 13-day high against the British pound. The euro also edged higher against the US dollar, while showed weakness versus the Swiss franc and the Japanese yen.

Germany's Federal Statistical Office said today in a final report that the consumer price index or CPI dropped 0.5% year-over-year in July, in contrast to the 0.1% increase in the preceding month. The consumer price index in July was revised up from 0.6% fall estimated in the preliminary report. This was the first annual decline in consumer prices since March 1987.

On a monthly basis, the CPI remained unchanged in July, revised from 0.1% fall reported initially. In June, the CPI was up 0.4%.

Against the US dollar, the European currency edged higher during early deals on Tuesday. At 3:25 am ET, the euro-dollar pair reached a high of 1.4183, compared to 1.4141 hit late New York Monday. The pair is currently trading at 1.4153 with 1.426 seen as the next target level.

The single currency that closed Monday's North American session at 0.8581 against the British pound climbed to 0.8618 at 3:40 am ET Tuesday. This set a 13-day high for the pair. If the euro-pound pair gains further, 0.866 is seen as the next target level.

Against the Swiss franc, the 16-nation currency edged down during Tuesday's early deals. At 6:20 am ET, the euro-franc pair declined to a 4-day low of 1.5336, compared to Monday's closing value of 1.5350. The next downside target level for the euro is seen around1.528.

The euro gained ground after hitting a 6-day low of 136.46 against the Japanese yen during early Asian deals on Tuesday. The euro-yen pair thus climbed to 137.39 at 3:25 am ET Tuesday before reversing direction. Currently, the pair is trading at 136.67, compared to yesterday's closing value of 137.39. On the downside, 135.0 is seen as the next target level for the pair.

Today, the Bank of Japan retained its key interest rate as expected and also maintained its cautious assessment about the economy.

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[pijoe]

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[IFX Svetlana]

Czech June Retail Sales Decline For Ninth Straight Month.

Thursday, the Czech statistical office said in a report that the retail sales dropped 4.9% year-over-year in June, compared with a 7.5% fall in the previous month. This was the ninth consecutive month of decline in retail sales. Economists had expected an increase of 4.5%.

Retail sales including automotive segment decreased a seasonally adjusted 1.1% on a monthly basis in June and it was down 5.8% from last year.

The statistical office said the seasonally adjusted sales in sale and repair of motor vehicle fell 1.4% compared to the previous month and it dropped 14% annually. Meanwhile, retail sales including sale of automotive fuel decreased 0.9% from May and 2.2% fall compared to the previous year.

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[IFX Svetlana]

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[IFX Svetlana]

European Currency Falls Against Most Majors.

Wednesday, the euro edged down against its U.S., Swiss and Japanese counterparts as reports showed that the German PPI declined in July and the Euro-zone current account deficit widened in June.

The European Central Bank report showed today that the Eurozone current account balance on an adjusted basis showed a deficit of EUR 5.3 billion in June, much larger than the revised EUR 0.1 billion deficit seen in May.

The deficit in June reflected EUR 5.2 billion deficit in current transfers and EUR 2.8 billion shortfall in income, which were partly offset by surpluses in goods and services. On an unadjusted basis, the current account deficit totaled EUR 0.3 billion in June.

Earlier today, Germany's Federal Statistical Office said in a report that the producer price index or PPI dropped 7.8% year-over-year in July, compared with a 4.6% fall in the previous month. Economists were looking for a decline of 6.5%. A year earlier, the PPI was up 8.2%. This was the lowest annual rate since the producer price statistics started in 1949, the Destatis said.

On a monthly basis, the PPI dropped 1.5% in July, after falling 0.1% in June. Economists had expected a decline of 0.2%.

In addition, the Eurozone construction output dropped a seasonally adjusted 1.1% % month-on-month in June after falling 2% in May, the Eurostat said today. On an annual basis, the construction production decreased 8.8% in June, compared with a 7.6% fall in May, revised from 8% fall reported initially.

Against the US dollar, the European currency edged down during early deals on Wednesday. At 4:10 am ET, the euro-dollar pair touched a low of 1.4086, moving from an early Asian session's 2-day high of 1.4173. The next downside target level for the pair is seen around 1.401.

The single currency that closed Tuesday's North American session at 0.8539 against the British pound climbed to 0.8613 at 5:15 am ET Wednesday. If the euro-pound pair gains further, 0.868 is seen as the next target level.

The pound extended its Asian session's slide as the minutes from the Bank of England's policy meeting showed that policymakers were divided about the amount by which to extend its asset-buying programme.

The minutes of the Bank of England showed today that six members of the Monetary Policy Committee voted to raise the size of asset purchases by GBP 50 billion. While, other three members sought a GBP 75 billion increase to GBP 200 billion.

The meeting was held on August 5 and 6. The central bank held the key interest rate unchanged at 0.5% in this meeting.

Governor Mervyn King, Tim Besley and David Miles were the three members who preferred a larger increase in asset purchase programme.

Against the Swiss franc, the 16-nation currency showed weakness during today's early deals. At 3:00 am ET, the euro-franc pair declined to 1.5179, compared to Tuesday's closing value of 1.5206. The pair is currently trading at 1.5188 with 1.515 seen as the next target level.

The euro that closed Tuesday's New York deals at 133.85 against the Japanese yen slipped to a 4-day low of 132.64 at 2:45 am ET Wednesday. On the downside, 131.7 is seen as the next target level for the euro. The euro-yen pair is presently trading at 132.94.

Japan's all industry activity index dropped 8.2% year-on-year in June, slower than a 10.2% fall in the preceding month, the Ministry of Economy, Trade and Industry said today.

On a monthly basis, the index rose a seasonally adjusted 0.1% in June compared to a 0.7% rise in the preceding month. Economists expected an increase of 0.3%. The index rose for the third consecutive month in June.

There are no important economic reports scheduled to be released from U.S. today.

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[IFX Darika]

Dollar Declines Against European Majors

The US dollar that showed signs of recovery against most of its major rivals immediately following the release of the S&P/Case-Shiller home price index for June lost ground shortly. As of 9:10 am ET, the greenback drifted lower to 1.0571 against the Swiss franc, 1.6447 versus the pound and 1.4362 against the euro.

The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.

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[IFX Svetlana]

Dollar Rises To New 6-week High Against Pound, 5-day High Against Franc.

The US dollar that staged a rebound in early European trading against its European major rivals extended its rally thereafter.

The greenback rose to a new 6-week high of 1.624 against the pound and a 5-day high of 1.0655 against the Swiss franc by 7:30 am ET, compared to yesterday's closing values of 1.6354 and 1.0618, respectively. Next target levels for the pound-buck pair and dollar-franc pair are seen at 1.62 and 1.07, respectively.

Hovering near yesterday's 4-day high, the dollar advanced to 1.4263 against the European single unit by 7:40 am ET and the pair is likely to find target around the 1.42 resistance level. The euro-buck pair was worth 1.4299 at Tuesday's close.

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[IFX Darika]

UK House Prices Rise For Fourth Month In August - Nationwide

House prices in the UK rose for the fourth consecutive month in August, increasing by 1.6% month-on-month on a seasonally adjusted basis, the Nationwide building society said Thursday. Economists had forecast house prices to grow only 0.5% after a revised increase of 1.4% in July.

Compared to the previous year, house prices fell 2.7% in August, much slower than the 6.2% decline seen in July. The average price of a typical UK property stood at GBP 160,224, up from GBP 158,871 in July.

Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%, the Nationwide said.

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[IFX Svetlana]

European Currency Falls From 4-day High Against Dollar And Yen.

During early European deals on Tuesday, the European currency declined from a 4-day high against the US dollar and the Japanese yen. The euro also edged down versus the Swiss franc, while rose to a 5-day high against the British pound.

In economic news from Europe, a key indicator for Eurozone manufacturing activity increased to a 14-month high in August, rising more than initially estimated, a report by Markit Economics said today. However, the sector continued to contract, though at a slower pace. The final Markit Manufacturing Purchasing Managers' Index or PMI climbed to 48.2 in August from 46.3 in July. The index also stood above the flash estimate of 47.9. The final reading came in above the flash for the fifth month running.

Eurostat said in a report that Eurozone jobless rate stood at 9.5% in July, up from 9.4% in the previous month. This was the highest jobless rate since May 1999. The jobless rate came in line with economists' expectations. A year ago, the jobless rate was 7.5%.

German retail sales recorded a monthly growth in July after declining in the previous two months, official data showed today. Retail turnover rose by a real 0.7% month-on-month in July after falling 1.3% in June, provisional results from the Federal Statistical Office showed today. Retail sales growth matched expectations. Annually, retail sales slipped 1%, slightly slower than the expected decline of 1.2%.

Against the US dollar, the European currency lost ground after hitting a 4-day high of 1.4379 at 2:00 am ET Tuesday. The euro-dollar pair is currently trading at 1.4327 with 1.415 seen as the next target level.

The single currency that closed Monday's North American session at 0.8803 against the British pound slipped to a 5-day low of 0.8774 at 3:40 am ET Tuesday. Thereafter, the euro-pound pair reversed its direction and is presently trading at a 5-day high of 0.8838. The next upside target level for the European currency is seen around 0.893.

The numbers of loan approvals for house purchase in the UK stood at 50,123 in July, up from 47,891 in June, the Bank of England reported today. Economists were expecting a level of 50,100 for July.

Against the Swiss franc, the 16-nation currency edged down during early deals on Tuesday. At 5:05 am ET, the euro-franc pair declined to 1.5156, compared to 1.5181 hit late New York Monday. If the pair falls further, 1.513 is seen as the next target level.

The Swiss economy contracted less than expected in the second quarter as investment rebounded and the pace of decline in exports eased, official data showed today.

Gross domestic product or GDP fell 0.3% sequentially in the second quarter, the State Secretariat for Economic Affairs or SECO said. Economists had forecast GDP to fall 1% in the second quarter after a revised decline of 0.9% in the first quarter. GDP fell for the fourth straight quarter.

Switzerland's Purchasing Managers' Index rose to 50.2 in August from 44.3 in July, a survey from the SVME Association of Purchasing and Materials Management and Credit Suisse showed Tuesday. The indicator also stood above the expected level of 46.9.

The euro that reached a 4-day high of 134.17 against the Japanese yen at 3:15 am ET Tuesday weakened thereafter. Currently, the euro-yen pair is quoted at 133.53, compared to Monday's closing value of 133.49. On the downside, 132.2 is seen as the next target level for the pair.

From the U.S., the ISM manufacturing index for August and the pending home sales and construction spending reports for July have been slated for release in North American session.

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