Wednesday August 5, 2009 - 10:37:10 GMT
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Tamley Global Markets - www.tamley.com
Markets Turn Cautious Ahead of Data
Despite a positive close on Wall Street, global stock markets are reported as becoming increasingly nervous about the sustainability of the current upswing in equities and the possibility of a round of profit taking on the gains of the past three weeks.
This anxiety has left the euro, as well as other majors, in a relatively tight range versus the dollar as markets await todayâ€™s release of key services PMI/ISM data from the eurozone and the US. This afternoon also sees the release of the July ADP employment report, which could provide some direction ahead of Fridayâ€™s official payrolls report. Nonetheless, despite the air of caution, the euro remains well within sight of its yearly highs seen earlier in the week, and if the dayâ€™s data prove supportive of the recovery theory, then a bounce back towards this level could be on the cards. Housing data from the US released overnight were certainly positive, showing pending home sales up 2.6% in June, a fifth straight monthly gain.
Following its spike higher earlier in the week, sterling is treading water around the $1.69 level versus the dollar as markets await todayâ€™s UK services PMI data before taking any fresh positions. Meanwhile, versus the euro trading is centred on the Stg0.85p level. Data released overnight should be sterling supportive, with the Halifax house price index showing prices up 1.1% over the month of July, a much better than expected result. Although housing market conditions remain difficult, due to poor credit conditions and rising unemployment, all of the main sectoral surveys are now showing that the fall in prices looks to have at least bottomed. Meanwhile, speculation continues over the possible extension of the Bank of Englandâ€™s quantitative easing activities at this weeksâ€™ 2 day policy meeting, which gets underway today.
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