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6 August 2010
Danske Daily
Key news
Market movers today:
Disappointing weekly US job data sent stocks lower ahead of today’s US employment
report. Treasuries gain slightly. Very quiet FX markets. USD: Non-farm payrolls (14.30
CET)
Wheat prices surge to 2-year high after Russian export ban raises global food fears.
NOK: Manufacturing production
Nobel Prize winner Stiglitz says that the US needs another round of stimulus.
(10.00 CET)
GBP: Industrial and manufacturing
Markets Overnight production (10.30 CET)
US stocks retreated slightly yesterday on concerns that the job market is recovering DEM: Industrial production (12.00
slower than anticipated. Compared to a week ago, initial jobless claims rose instead of CET)
falling and continuing claims fell less than expected. The S&P500 index lost 0.1% after Earnings: Dexia, RBS, AIG
having spent most of the trading session deeper in negative territory. Information-
technology shares led the losses. Investors sought safety in Treasuries, which rose Market overview
broadly. The increase in Treasuries pushed the yield on the 10-year note down to 2.90%.
07:30 1 day +/-,%
Equity markets in Asia have been mixed overnight with the MSCI Asia Pacific index S&P500 (clo se) 1125.8 -0.13
S&P500 fut (chng fro m clo se) 1124.7 0.11
little changed. Japan’s Nikkei225 index is 0.3% lower on concerns that the strong yen Nikkei 9632.9 -0.22
will hurt exporters. Hang Seng 21671.6 0.56
In commodity markets, wheat has soared to USD8.68 a bushel, the highest level since +/-, %
EUR/USD 1.314 1.318 0.27
August 2008. A heatwave in Russia, dry weather in Kazakhstan, Ukraine and the USD/JPY 85.870 86.080 0.24
EUR/CHF 1.38 1.38 0.44
European Union, and flooding in Canada have ruined crops and sent wheat prices up 94% EUR/GBP 0.830 0.830 -0.03
since 9 June. The Russian Prime Minister, Vladimir Putin, responded to his country’s EUR/SEK 9.398 9.394 -0.04
EUR/NOK 7.90 7.89 -0.14
crippling drought yesterday by banning grain exports from 15 August until the end of the
USD
year. Oil Brent, USD 81.5 81.6 0.06
Gold, USD 1192.6 1195.8 0.27
In a Bloomberg interview overnight, Nobel Prize-winning economist Joseph Stiglitz said Note:
the US economy faces an “anaemic recovery” and the government will need to enact * The iTraxx Europe Index show the spread
development for the most liquid investment grade CDS
another round of “better designed” stimulus measures. The Obama administration took contracts in the euro credit market.
“a big gamble and it doesn’t look like it’s paying off,” Stiglitz said who added that “It’s
**The iTraxx Europe Crossover show the spread
absolutely clear that you need a second round of stimulus”. Financial markets don’t even development of the most liquid non-investment grade
price a full hike from the Fed over the next 12 months now. CDS contracts in the euro credit market.
Source: Bloomberg
Senior Analyst
John Musaeus Hydeskov
+45 45 12 84 97
johy@danskebank.dk
www.danskeresearch.com
Danske Daily
Global Daily
Focus today: The main event today is the US employment report for July. Once again
Will private payrolls improve?
payroll data will be negatively affected by the continued layoff of Census workers, hence
focus will be on private hiring. We expect a moderate report with +80K in private
payrolls and an unchanged unemployment rate at 9.6%. Hence, the report should do little
to calm fears for H2. Earning reports from Dexia, RBS and AIG will probably make some
headlines as well.
Fixed income markets: Global bond markets will focus on the non-farm payrolls to
gauge the robustness of the economy into H2. A reading in the 50-150K range (including
net revisions) in private payrolls would probably be reasonably within expectations given Source: Reuters Ecowin
the usual volatility of the report. Hence, we do not expect any significant market reactions
to the release, as a reading around +80K would not provide much new information for the
US S&P500 future
markets about the H2 outlook, but as always caution is warranted.
FX markets: The dollar will be in the hands of payroll data and a weak outcome might 1124 1124
1114 1114
be another slap in the greenback’s face. It is important to emphasize that it is a matter of
1104 1104
balance however; a really dreadful number might send the dollar stronger as stock
1094 1094
markets will react negatively if the jobs report is really bad. One has to be careful today.
1084 1084
Also pay attention to EUR/CHF that seems like it can go somewhat higher on the short Wed Thu Mon Tue Wed Fri
horizon. We still see GBP as too expensive but today’s UK data will probably not cause Source: Danske Markets
any correction.
9.34 7.85
Wed Thu Mon Tue Wed Fri
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Danske Daily
FX & COMMODITIES
O il,
EUR/USD Intraday E UR 17:00 07:30 +/- G o ld, $ B re nt , $
132.3 132.3 USD 131.43 131.79 0.36 07:30 1195.80 81.57
JP Y 112.86 113.44 0.58 1day 0.85 -0.04
131.9Max ## 131.9 GB P 83.02 82.99 -0.03 1mo nth 3.17 10.12
Min ## NOK 789.77 788.67 -1.10 Year-t-date 98.85 3.64
131.5 0.4 131.5 SEK 939.77 939.37 -0.40
DKK 745.13 745.15 0.02 CRB C R B , R aw
131.1 131.1 P LN 399.06 399.16 0.10 1M f ut ure Indus t ria ls
07 10 13 16 19 22 01 04 US D 17:00 07:30 +/- 07:30 277.67 491.97
JP Y 85.87 86.08 0.21 1day -1.31 1.94
1mo nth 5.53 GB P 158.33 158.80 0.47 1mo nth 24.17 18.49
Year-to -date -11.42 CHF 104.71 104.88 0.17 Year-t-date -5.71 8.48
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