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Forex Blog - European Market Update: Markets Await Non-Farm Payrolls
Â·*** ECONOMIC DATA ***
Retail Sales: M/M -1.4% v -0.5%e || Prior revised fro m1.3% to 0.5% ||||
Y/Y -3.9% v -0.8%e || Prior revised from 0.7% to 1.0%
Swedbank PMI: 48.6 v 49.7e
Â·SP July Manufacturing PMI: 39.2 v 40.6
Â·IT July Manufacturing PMI: 45.3 v 45.9e
Â·FR July Final
Manufacturing PMI: 47.1 v 47.3e
Â·GE July Final Manufacturing PMI: 50.
9 v 50.9e
Â·UK July Manufacturing PMI: 44.3 v 45.5e
Russian Central Bank raises reserve requirement (unexpected; details not
Â·*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Â·BMW Group [BMW.GE] adjusts its outlook overnight due to
difficult market conditions. BMW guided 1H Q2 pretax profit of â‚¬602M, down
from â‚¬1.07B a year ago, net income of â‚¬507M, down from â‚¬753M a year ago,
and revenue of â‚¬14.55B, below the â‚¬15.4B consensus. BMW's risk provision
expense increased to â‚¬695M. A spokesperson said that business conditions
for the automobile industry have deteriorated sharply over the past weeks.
[Shares were -10.8% in early trading]. British Airways [BAY.UK] reported Q2
net income of ÂŁ27M, below the ÂŁ35M consensus, and operating profit of ÂŁ35M,
below the ÂŁ55M consensus. Revenue of ÂŁ2.26B was just above the ÂŁ2.21B
consensus. The company said that it is facing the worst trading environment
in its history, and cut its FY08 revenue growth forecast to +3% from +4%.
[Shares were -5.0% in early trading]. UCB [UCB.BE] reported 1H net income
of â‚¬108M, above the â‚¬100M consensus, and revenue of â‚¬1.7B, just below the
â‚¬1.75B consensus. UCB guided FY08 revenue of â€śover â‚¬3.3Bâ€ť above the â‚¬3.27B
consensus, and EBITDA of â€śabout â‚¬650M,â€ť above the â‚¬600M consensus. [Shares
were +0.5% in early trading]. Electricitie de France [EDF.FR] reported 1H
net income of â‚¬3.08B, just below the â‚¬3.13B consensus. EBITDA for the 1H
came in at â‚¬9.04B, just above the â‚¬8.97B forecast, while revenue of â‚¬32.2B
was just above the â‚¬32B consensus. [Shares were -1.0% in early trading].
Linde [LIN.GE] reported Q2 net income of â‚¬215M, well above the â‚¬150M
consensus, and pretax of â‚¬305M, above the â‚¬237M expected. Revenue for Q2
came in at â‚¬3.34B, above the â‚¬3.1B consensus. Linde reaffirmed both its
short and mid-term forecasts. [Shares were +1.0% in early trading]. Enel
[ENEL.IT] reported 1H net income of â‚¬2.85B, well above the â‚¬2.21B consensus,
and revenue of â‚¬29.3B in line with consensus estimates. Enel reported
EBITDA of â‚¬7.41B, up from the â‚¬4.46B a year ago, and confirmed its outlook
for FY08. [Shares were flat in early trading]. StatoilHydro [STL.NO]
reported Q2 net income of NOK18.9B, above the NOK17.5B consensus, and
operating profit of NOK62.6B, above the NOK59.9B forecast. Revenue of
NOK170.6B was below the NOK185.4B consensus. [Shares were -2.9% in early
trading]. EDF [EDF.FR] and British Energy [BGY.UK] announced that they were
unable to strike a deal overnight.
Â·In currencies the focus will be
US payrolls data due out later today. In the hours leading up to the key
data, the USD has encountered a consolidating tone. The USD was supported
by a growing consensus that the Euro-Zone economic situation is 'less
robust'. Dealers seemed to be focusing on a possible contraction in Q2 Euro-
Zone GDP as hinted by an alleged ECB source on Thursday. The GBP was
broadly lower in the session against its major pairs as dealers noted that
comments from BOE's Tucker made on Thursday were seen in a 'dovish' manner.
The BOE's Tucker noted that the weaker economic outlook should help contain
CPI risks. Softer metal prices and lower crude has been weakening the
commodity-related currency pairs. The AUD maintained its soft tone in
Europe as dealers suggest that the RBA may have pushed rates too high as an
insurance policy and will likely lower rates in the coming quarters.
Â·*** NOTES ***
Â·After a long, tiring week of earnings things
were relatively quiet overnight. With the exception of Germany, PMI reading
in Europe were below the 50 mark indicating a contracting, with most
readings declining to new multi-year lows. German retail sales were below
expectations, but managed to stay within its recent range. On the equity
front BMW's reduction to its outlook was in focus overnight along with the
breakdown of talks between EDF and British Energy. On the equity/fixed
income front the Vereinte Dienstleistungsgewerkschaft (or ver.di union)
reached a wage agreement with Lhufshansa. Ground and cabin employees will
receive a 5% wage increase from July, an additional 2.3% wage increase in
July of 2009, and a one time bonus of 2.4%. Recall that the ECB is
monitoring wage developments for possible second round inflation effects.
Looking ahead the focus will be on the July change in nonfarm payrolls.
Payrolls are expected at -75K; June's reading was -62K. That data will be
released at 8:30 ET.
Â·â€śEvery man has a right to risk his own life
for the preservation of it.â€ť - Jean Jacques Rousseau
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