Daily Market Report – 01/08/2014

USD
The Dollar further strengthened during yesterday’s session after fewer Americans filed applications for unemployment benefits over the past month than at any time in more than eight years, signalling employers are hanging on to workers as demand improves.

While plant shutdowns in the automotive industry during this time of year make it more difficult for the government to adjust the data for seasonal variations, the declining trend points to a job market that is heating up. On Wednesday Federal Reserve official’s policy makers said the labour market still has plenty of room for improvement, despite economists believing the threat of disinflation diminishing.
 
EUR
The Euro traded within a narrow range despite news of inflation slowing in July to its lowest rate since 2009. The news disappointed the markets as the European central bank (ECB) has unleashed an unprecedented round of easing measures in an attempt to rekindle price growth and help the 18-country bloc’s battered economy. 

For the past 10 months the inflation rate has been weaker than 1 percent, less than half the ECB’s goal, while joblessness has remained stubbornly near an all-time high for months, panting a worrying picture for the ECB.

This morning news of EU sanctions freezing out Russian banks dominated the headlines, concerning analysts about the potential effects to the city. The restrictions placed on the banks are the strictest yet to come from the EU, and aim to lock the institutions out of the bloc’s capital markets – of which London has the largest and most developed.

The sanctions say that sales of dual-use goods and technology – which could be used for military use in Russia – are now prohibited. How­ever, the statement adds that this will apply only to contracts made from today, excluding France’s sale of two Mistral warships that it is selling to the Russian government.
 
Key Announcements:
9:30 BST - GBP-Manufacturing PMI expected to be lower at 57.2
13:30 BST- USD-Non-Farm Employment Change expected higher at 233k 
13:30 BST- USD -Unemployment Rate unchanged at 6.1%
15:00 BST - USD-ISM Manufacturing PMI expected to be higher at 56

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