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Weekly Market Outlook for the Week of 8/30/10

August 30, 2010

This week’s major economic reports include consumer-spending on Monday, ISM data on Wednesday and the Non-Farm Payroll report on Friday. The ISM (Institute for Supply Management) survey of manufacturers is expected to fall slightly to 53.5% from 55.5%.

Affecting the Australian (AUD) dollar on Monday are Building approvals (month over month) and retail sales (month over month) to be issued 9:30pm US EST.

On Tuesday the Canadian (CAD) month over month GDP figures will be released before the market opens.

Wednesday will see the British pound (GBP) affected by the UK manufacturing report and homes report issued by Halifax Bank of Scotland.

Thursday keep an eye out for the ECB press conference, surely to affect the EUR/USD pair.

The major news for the week will naturally be focused on Friday’s Non-farm Payroll Report (NFP), which has produced disappointing results over the last two months. Investors will continue to focus on meager job growth in the US, with a jobless rate ticking up to to 9.6% from 9.5%, following the layoff of temporary Census Workers. That number would also look far worse if it included the people who are too discouraged to look for work.

Lets look at how this will affect the major markets:

Stocks:

Last week stocks shot higher as investors searching for confidence were reassured by Federal Reserve Chairman Ben Bernanke’s vow to do whatever it takes to revive the shaky economy. Let’s see if that momentum continues this week.

Following his speech The Dow Jones Industrial Average vaulted 125 points, or 1.3%, to 10111 during early afternoon trading.

Currencies:

Japan’s yen erased its early losses against major rivals Monday, after an emergency easing by the Bank of Japan failed to stem the currency’s strength for long.

The dollar slipped to ¥84.94 from ¥85.39 yen in late North American trading on Friday, after rising as high as ¥85.88 after the special meeting was announced. The yen hit a 15-year high versus the dollar last week.

The euro also slipped against the yen, buying ¥108.06, down from ¥108.75 late Friday and from a Monday high of ¥109.55.

Commodities:

Crude futures were little changed in Asia Monday, supported by a weak dollar, but lacking any upward momentum from supply-demand fundamentals.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at $75.11 a barrel at 0655 GMT, down 6 cents in the Globex electronic session. October Brent crude on London’s ICE Futures exchange fell 10 cents to $76.55 a barrel.

Oil has bounced back from a trough of $70.76/barrel reached Aug. 25 as investors renew their appetite for risk and sell the greenback. The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was down 0.02 at 82.74.

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