Daily Market Report 08/11/12

The Obama effect on trading yesterday lasted only a few hours before the problems in Europe returned to the forefront.

In the early morning, breaking news of Barack Obama’s second term as president caused investors to recognise America’s path forward involved further spending, which in turn resulted in greater risk appetite.

Although shortly afterwards, the release of negative euro data quickly quelled this risk-on attitude as the euro tumbled against most of its major peers and caused investors to rush back to the safety of the dollar.

The German economy is looking increasingly flat as industrial production figures tumbled to a 1.8% contraction as evidence suggests that the rest of the euro zone is dragging Europe’s flagship economy down. The US also faces crucial decisions to be made over the looming fiscal cliff, with analysts expecting that if the legislation was to become active, the American economy could face recessionary pressure.

Despite key approval in the Greek government’s vote to pass the latest round of austerity measures, the next tranche of bailout funds did not serve to lighten the mood as the overall economic picture was sombre.

Today the key announcements will be made by the UK and euro zone’s central banks, as both announce their own cash rates. Both are expected to keep the rates unchanged, but may offer prescience into what may happen in future meetings.

 

Today’s Key Announcements:
  • 07.00am – EUR – German Trade Balance: returned slightly lower at 17.0b
  • 09.30am – GBP – UK Trade balance: expected to marginally improve to -9.1B
  • 12.00pm – GBP – Asset Purchase Facility: expected to remain at the same level
  • 12.00pm – GBP – Official Bank Rate: expected to remain at 0.5%
  • Tentative – GBP – MPC Rate Statement
  • 12.45pm – EUR – Minimum Bid Rate: expected to remain 0.75%
  • 13.30pm – EUR – ECB Press Conference
  • 13.30pm – USD – Trade Balance: expected to slightly worse to -44.9B
  • 13.30pm – USD – Unemployment Claims: slight increase expected at 367k

 

See previous Daily Market Reports