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Euro Pounds Currency markets - property Costa Del Sol Spain August 4th 2006
Summary of Overnight News:
• The FTSE-100 will start with an opening rally following yesterday's sharp drop in reaction to the surprise UK
rate hike with Wall Street posting good gains overnight, although some caution is likely to emerge ahead of
today's key US jobs report, dealers said.
• Overnight on Wall Street, the DJIA closed 42.66 points higher at 11,242.59, while the Nasdaq composite index
ended 13.53 points firmer at 2,092.34 after some mild economic data and strong retail sales figures helped
investors overcome concerns about next week's Federal Reserve meeting.
• Economists believe, however, that today's July non-farm payrolls data could provide the definitive answer as to
whether the Fed will hike interest rates once again next Tuesday or pause for the first time after seventeen rate
hikes over the past two years.
• Forecasters predict US non-farm payrolls increasing by 145,000 in July, with the unemployment rate expected
to remain unchanged at 4.6 pct.
• Average hourly earnings are forecast to rise 0.3 pct.
• Meanwhile, in Asia today, the Nikkei 225 index at midday was 36.78 points higher at 15,507.15, while the
Hang Seng index ended its morning session 13.28 points firmer at 7,035.14.
• Oil prices were easier in Asian trade as concerns over the threat of hurricanes hitting the US Gulf Coast eased
and amid hopes of an agreement to stop the conflict in Lebanon.
• Light sweet crude for delivery in September fell 13 cents to 75.33 Usd a barrel from its close of 75.46 on the
New York Mercantile Exchange.
Figures out Today:
13:30 US change in non-farm payrolls (Jul) k Exp 160 Prev 121
13:30 US unemployment rate (Jul) % Exp 4.6 Prev 4.6
13:30 US average hourly earnings (Jul) %m/m Prev 0.5
• US non-farm payrolls (13:30) are today’s focus. One major London-based investment bank expects an increase
of 160k in July, which would represent an improvement from recent months but would still fall short of the
average gains seen in 2004 and 2005.
Figures out Today:
11:00 GE factory orders (Jun) sa %m/m Exp 1.4 Prev -1.2
11:00 GE factory orders (Jun) nsa %y/y Prev 17.3
Sterling rallies on surprise UK rate rise: A widely-expected interest rate rises in the eurozone failed to do much to lift
the euro on Thursday, but a shock hike from the Bank of England did the trick for sterling.
With the futures markets having priced in only a 15 per cent chance of the BoE raising rates by a quarter-point to 4.75
per cent to reverse the one-off cut of August 2005, sterling was always more likely to see upside action in the event of a
rate rise. And so it proved, with the pound hitting a one-year high in trade-weighted terms as it rose 0.5 per cent to
.8865 to the US dollar, 0.5 per cent to Ł0.6778 against the euro and 0.6 per cent to SFr2.3243 against the Swiss franc,
a one-year high. FT.com
EURO US DOLLAR @ 1.2768 GB POUND US DOLLAR @ 1.8760 GB POUND EURO @ 1.4690 US DOLLAR JPY @ 114.75
About the Author: Debbie regularly writes articles on the Euro Pounds markets and the current
Costa De Sol Spain market