Choppy range bound trading expected today

Yesterday’s non-farm payroll data came in weaker than expected with feedback that US employers shed nearly half a million jobs and the unemployment rate jumped to 9.5%. This continues to fuel concerns on economic recovery and contributed to a broad sell off in the equities market with the Dow off 2%, S&P 2.3% and the Nasdaq down 2.3% also. The dollar surprisingly did not gain on the news - the swing towards risk aversion benefited the Japanese Yen to a greater degree. The jobs data serves another cold dose of reality for the markets and indicates the recovery road could be slow and bumpy. We have a US holiday today for Independence day and the market will now focus on the US earnings period kicking off on Wednesday next week - however be careful of thin trading causing extra volatility within the current dollar trading ranges of 1.62-1.66 against sterling and 1.38 - 1.42 on EUR/USD.

Today we have eurozone retail sales, in April we saw the first increase for seven months with the Easter holiday and good weather helping the number. The consensus is for a slight decline for May. There was no change as expected in interest rates for the European central Bank. In the statement following the decision ECB president Trichet urged the banks to live up to their responsibilities and improve their capital base by taking advantage of government measures to re-capitalise. He added that economic activity is likely to remain weak although the pace of decline will be less than the first quarter of this year. The ECB is not planning any new monetary policy initiatives. The Euro lost a little ground after the decision against sterling and the USD but nothing to get excited about.

Finally some good news for Ireland as June services PMI rose to 42.3 from 39.5 in May - the number is still below 50 which indicates contraction but the improvement will be well received.

Expect choppy and thin trading today with no real direction - we have already seen a dip in sterling from open across the board.