Morning Forex Fundamental

EUR

'It's good if China eases because then, most likely, growth prospects will go higher for China…' - Pierre Mouton, a fund manager at Notz Stucki & Cie.

European stocks extended four-day winning streak on Thursday

Impact high

The majority of European stocks advanced further on Thursday after a report showed China's inflation cooled, boosting hopes the national central bank may ease monetary policy.

The Stoxx Europe 600 Index rose 0.40 per cent to 270.27. Germany's DAX Index slid 0.02 per cent and France's CAC 40 Index edged higher 0.54 per cent.

'If the figures show mild inflation and economic growth slows down as they have recently, there's a strong chance that China will add stimulus,' said Pierre Mouton, a fund manager at Notz Stucki & Cie. in Geneva.

'It's good if China eases because then, most likely, growth prospects will go higher for China and subsequently for the world and risk will be on. Because if China eases, demand goes higher and commodities demand goes higher,' said Christian Tegllund Blaabjerg, chief economist at FIH Erhvervsbank.

USD

'The clear decline [in claims numbers] since June provides some corroboration of the better-than-expected payrolls reading last week' - Jim O'Sullivan, chief US economist at High Frequency Economics

U.S. unemployment claims decline, trade deficit shrinks

Impact High

The number of Americans claiming for unemployment benefits declined to 361,000 in the week ended August 4 from 367,000 the week before, said the Department of Labor on Thursday.

'The clear decline [in claims numbers] since June provides some corroboration of the better-than-expected payrolls reading last week. In short, encouraging data for the recovery,' said Jim O'Sullivan, chief US economist at High Frequency Economics.

In a separate report, the Bureau of Economic Analysis said trade deficit shrank to $42.9 billion in June as exports rose and imports fell.

The Standard & Poor's 500 climbed 0.04% to 1,402.80. The Dow Jones Industrial Average slid 0.08%, or 10.45 points, to 13,165.19. The Nasdaq Composite gained 0.25% to 3,018.64.

GBP

'The Greater London housing market is another country compared with the remainder of the U.K.' - Peter Williams, chairman of Acadametrics

Acadametrics: U.K. house prices rise

Impact High

U.K. house prices rose in July to the highest level since 2008 helped by increased property prices in London, said the Acadametrics Ltd. The average cost of a home in the U.K. rose to 225,760 pounds, up by 3.2 per cent from the same period the previous year.

'This month we report stunning growth in some London boroughs,' Peter Williams, chairman of Acadametrics, said in a statement.

'The Greater London housing market is another country compared with the remainder of the U.K.' and 'is likely to continue to move further out of line with all or most of the market in the rest of England and Wales.'

The FTSE 100 Index rose 0.10 per cent, or 5.59 points to 5,851.51. The broader FTSE All-Share Index climbed 0.13 per cent

CHF

'The performance here is that Nestlé slightly accelerated its volume growth in the second quarter, a unique result in the sector' - Analysts at Vontobel Research

Swiss stocks rose on Thursday

Impact: Medium

Swiss stocks advanced on Thursday after Nestlé SA, the world largest food company by sales, reported earnings that beat analysts' forecasts.

The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies gained 0.73%, or 47.29, to 6,505.29. The broader Swiss Performance Index advanced 0.70%, or 41.83 points, to 6,016.03.

'The performance here is that Nestlé slightly accelerated its volume growth in the second quarter, a unique result in the sector,' said analysts at Vontobel Research in a note.

JPY

'Investors are selling shares to lock in profit from this week's gain' - Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co.

Japanese stocks closed in red on Friday

Impact: Medium

Japanese stocks lost ground on Friday after company earnings came in worse than expected.

The Nikkei 225 Stock Average fell 0.97 per cent, or 87.16 points, to 8,891.44. The broader Topix Index retreated 0.67 per cent, or 5.05, to 746.79.

'Investors are selling shares to lock in profit from this week's gain,' said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo.

'Earnings at domestic-demand focused companies aren't bad, but those depending on external demand are being hurt by the yen's appreciation and European debt problems.'

Press Review

Europe

The European Central Bank said they may 'undertake outright market operations', as soon as European governments will activate the region's rescue funds to buy government bonds. The ECB kept its key lending rate at 0.75%.

Spanish and Italian bonds jumped, pushing Spain's benchmark 10-year yield down to 6.82%, and Italy's 10-year debt yields to 6.06%.

Monti Takes Off Gloves in Euro Zone Fight

http://www.cnbc.com/id/48583929

Italian Prime Minister Mario Monti has taken the gloves off in his fight to save Italy from disaster in the euro zone debt crisis, daring to stand up to European paymaster Germany in a way unthinkable a few months back.

UK trade deficit hits new record

http://www.guardian.co.uk/business/2012/aug/09/uk-trade-deficit-new-record

Britain's trade deficit ballooned to its highest level since modern records began following a sharp drop in exports.

USA

The U.S. July jobs data came in better-than-expected; nonfarm payrolls rose to 163,000 in July, from 64,000 in June. In the meantime, the unemployment rate rose to 8.3 per cent in July, from the previous 8.2 per cent in June. Additionally, treasury yields hit record lows of 1.379% on 10-year notes and 0.535% on 5-year notes.

The Fed claimed its ready to act and introduce another quantitative easing if the economy does not start to recover.

Jobs, trade data supports modest economic growth

http://www.reuters.com/article/2012/08/09/us-usa-economy-idUSBRE8780OY20120809

The number of Americans filing new claims for jobless benefits unexpectedly fell last week, offering hope that some of last month's improvement in job growth could be sustained and give the U.S. economy a lift.

US trade gap narrows in June on weaker oil prices

http://www.bbc.co.uk/news/business-19196425

The US trade deficit narrowed in June as a steep drop in oil prices helped ease the country's import bill, while exports increased slightly

Asia & Pacific

The Chinese top officials work on a new set of measures to address the slowdown in the economy and sustain macroeconomic growth. Previously, the People's Bank of China cut the benchmark interest rate by 0.31%.

China is suffering a major economic slowdown, as growth flags in the country's real estate, construction, steel, and other sectors. As a part of fiscal opening policy, China will allow direct Yen-Yuan trades.

China Increases Fuel Prices For First Time In Five Months

http://www.bloomberg.com/news/2012-08-09/china-increases-fuel-prices-for-first-time-in-five-months.html

China, the world's second-biggest oil consumer, increased gasoline and diesel prices for the first time since March after global crude costs climbed.

Australia's RBA ups 2012 GDP forecast to 3.5%

http://www.marketwatch.com/story/australias-rba-ups-2012-gdp-forecast-to-35-2012-08-09?link=MW_home_latest_news

The Reserve Bank of Australia Friday raised its 2012 gross domestic product forecast, citing stronger-than-expected growth in the first part of the year.