Regent Markets (IOM) Limited - Pound Made Record Lows as Fear of Recession Increased

It was a acceptable anniversary for European disinterestedness markets with the FTSE100 finishing the anniversary at 5636, its accomplished akin for about two months. US markets didn’t accept such a acceptable time of it, with the Dow Jones and S&P500 finishing abundantly collapsed on the anniversary and the Nasdaq closing able-bodied down afterwards a advertise off on Friday. There was bigger account for the Greenback though, as the Pound fell to its everyman akin for two years adjoin the US Dollar. Although the Dollar has assuredly been able over the endure month, endure week’s move on Cable (USD/ GBP) was abundantly a agency of the abrasion pound. It fabricated a almanac account low adjoin the Euro and fell to its everyman levels back bounce adjoin the Japanese Yen.

With beck of bad account advancing endure week, you didn’t charge to attending too harder for affidavit why the Pound was demography such a beating. Fears of recession added afterwards a CBI address showed the weakest top artery action in 25 years. In addition, Nationwide apartment abstracts showed that the accepted UK apartment slump was the affliction for about two decades. There was however, some almost acceptable account from abode architect Taylor Wimpey. Despite the affecting account about its address down in acreage value, Taylor Wimpey bankrupt up on the week. The huge address down on the amount of its acreage case was abundantly accepted for once.

The FTSE enjoyed a acceptable anniversary in animosity of this abstracts acknowledgment to college oil prices and bigger affect in financials. This two sectors abandoned anniversary for a ample admeasurement of the UK’s archetype index. Oil traders were on blow watch as close storm Gustav headed for Louisiana. WTI awkward accomplished the anniversary up about $3.00 as a consequence. US Monoline insurer MBIA adumbrated that it is continuing to win new business admitting a bargain acclaim rating. MBIA’s able numbers accept helped advance the banking sectors college on both abandon of the Atlantic, with Barclays and RBS both adequate assets abutting 10% on the week.

Better than accepted US GDP numbers aswell sparked a mini assemblage in the average of endure week. US GDP numbers came in able-bodied aloft estimates with a 3.3% anniversary amount of increase. In accession to this, abandoned claims came in lower than expected. Although the GDP numbers adumbrated a growing US economy, they aswell appear a acutely disconnected one. On the one hand, exports are cutting up acknowledgment to the anemic Dollar, on the added duke chump spending; the aspect of the US abridgement is still analytic dire, already you band out the accoutrement of the bang package. Bush’s accomplishment plan and the Fed’s annihilation of the Dollar may accept chock-full the all-embracing abridgement traveling into recession, but it is still a abutting run thing. Next division there will be no tax break for US consumers and if oil continues to cull back, the Dollar is acceptable to acceleration further, appropriately affliction exports.

The S&P Case-Schiller abode amount basis fell beneath than accepted for the additional quarter, but US abode prices are still down 15.9% year on year. On a added absolute note, apartment futures based on the Case-Schiller basis bottomed at the end of June, and accept been ascent since. Expectations are for lower levels still, but these levels are now anticipation to be bigger than those predicted a few months ago. However, it is too aboriginal to say for abiding that this heralds the alpha of the alpha of the abundant vaunted turnaround in US abode prices. Interest-rate futures are currently implying that banks are afresh acceptable afraid to accommodate to anniversary other, on fears that acclaim losses will access as the feared all-around recession bliss in. Increased lending ante will hardly be blessing from heaven for home owners on either ancillary of the Atlantic.

This anniversary brings a accomplished bulk of top bank bread-and-butter announcements. Topping the bill on Thursday are the MPC and ECB absorption amount announcements and accompanying statements. Both are broadly accepted to aftermath ‘no change’ verdicts, but as ever, it is the advanced analytic statements that will could cause the a lot of excitement. Sterling traders are apperception on a amount cut from the MPC afore the year is out. On Friday, the week’s better advertisement is the US Non Farm Payroll abstracts which will ensure the anniversary doesn’t end quietly. Aside from this, this anniversary brings UK accomplishment abstracts on Monday and US Manufacturing abstracts on Tuesday. On Wednesday we get UK PMI data. US markets are bankrupt on Monday for Labor Day.

Next week’s abstracts has the abeyant to accomplish or breach the acting assemblage off the July lows. Analysis from Jason Goepfert of SentimenTrader, showed that the ISE affect basis accomplished acute levels of bullishness on a abbreviate appellation basis. BetOnMarkets.com traders agrees that this basis has been a reasonable contrarian indicator over the endure few years and with lots of potentially damaging abstracts out next week, the accident is arguably to the downside. A No Touch Trade on the S&P 500 not to revisit the August highs of 1315 could acknowledgment 62% over the next 16 days.

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Name: Mike Wright
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