Market Report

The pound fell against the euro on speculation U.K. interest rates have peaked while the European Central Bank will probably raise its key rate further, eroding the pound's yield advantage.

The Bank of England and the ECB kept their benchmark rates on hold yesterday, at 5.75 percent and 4 percent respectively, as they assess the effect on markets of losses linked to U.S. subprime mortgages. While the BOE said inflation "may remain around, or little below" its target, the ECB noted price risks "lie on the upside."

U.S. job growth picked up in August, suggesting most industries are coping with the housing slump and credit-market rout without firing workers, economists said before a report today.

The New Zealand dollar snapped four days of losses as better-than-expected U.S. retail sales spurred a rebound in stocks, emboldening traders to return to buying higher-yielding assets with cheaply borrowed yen.

Today sees the release of the Non Farm Payroll data from the U.S at 1.30pm which always makes for a fun day in the markets.

Have a great weekend.

VC

Sterling weakened on Wednesday as continuing risk aversion weighed on equities and higher-yielding currencies, ahead of a survey of UK service sector activity and Thursday's interest rate decision by the Bank of England. Lets just hope the England Football, Cricket and Rugby teams take a little bit of risk in the upcoming sporting events to secure victory!

U.S. commercial real estate prices may fall as much as 15 percent over the next year in the broadest decline since the 2001 recession as rising borrowing costs force property owners to accept less or postpone sales.

LR

The pound strengthened versus other major currencies on Monday, boosted by strong British manufacturing data and by a reduction in risk aversion which saw investors dip their toes back into the market. Signs of global markets stabilisation encouraged investors tentatively to re-enter carry trades, in which high-yield currencies such as the pound are bought for low-yielders such as the Japanese yen.

The Australian dollar rose against all 16 most-traded currencies after a government report showed the economy grew almost twice as fast as economists expected in the second quarter.

Yesterday was a holiday in the U.S

Data release today
9.30 U.K construction PMI
10.00 E.U Producer Prices
15.00 U.S I.S.M Manufacturing Index

VC

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