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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 107455, member: 38730"] [b]Daily Market Outlook 10 August[/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] Asian shares hit a one-year high on Wednesday while the dollar and Treasury yields slid on weak U.S. productivity data and sterling recovered from a one-month low. The dollar index, which tracks the U.S. currency against a basket of six peers, retreated 0.4 percent to 95.814. Additionally, the Bank of England's reverse bond auction failed to meet its target on Tuesday, highlighting the scarcity of investors willing to sell from a quickly dwindling pool of long-term bonds with positive yields. The British central bank announced last week that it would be increasing its bond buying in addition to cutting interest rates in the latest effort to stimulate the country's economy. The British pound recovered 0.5 percent to $1.3063, after hitting a one-month low of $1.2956 GBP=D4 on Tuesday as Bank of England policymaker Ian McCafferty said the central bank will probably have to loosen monetary policy further if the UK's economy worsens. The dollar fell against the yen on Wednesday as retreating Tokyo stocks drove safe-haven bids for the yen, while bargain hunting helped the battered pound crawl away from its one-month low. The greenback also sagged against the euro and Australian dollar after downbeat productivity data sapped some of the momentum it had gained from last week's robust U.S. jobs report. The pound took a knock on Tuesday after Bank of England policymaker Ian McCafferty said more monetary easing was likely to be needed if the UK's economic decline worsened. Trading volumes are expected to be relatively light this week with many traders and investors on a summer break. Sterling may have rebounded but the British currency was expected to continue struggling in the longer term. U.S. worker productivity fell for the third straight quarter in the spring this year, suggesting that corporate profits may continue to decline and wage growth may remain sluggish. The Labor Department said on Tuesday that productivity, which measures hourly output per worker, dropped at a 0.5 percent annual rate in the April-June period, extending the longest decline since 1979. Productivity fell at an unrevised 0.6 percent rate in the first quarter. In the second quarter, productivity decreased at a 0.4% rate compared to the same period last year, the fastest year-on-year pace of decline in three years. Revisions to data going back to 2013 also confirmed the softening productivity trend, but strong employment gains have helped to raise output overall with U.S. payrolls growing by more than 500,000 jobs in June and July. After rising rapidly in the 1990s as computers made workers more efficient, productivity has fallen as companies have been reluctant to invest in new equipment in the past 18 months given the outlook for sluggish economic growth globally. The Commerce Department reported last month that gross domestic product rose at a 1.2% annual rate in the second quarter following a 0.8% rise in the first quarter. The estimate for second-quarter GDP growth could be revised slightly up after a separate report from the Commerce Department on Tuesday showed wholesale inventories increased 0.3 percent in June. The government had previously reported wholesale inventories as being unchanged in June. Oil prices dipped on Wednesday as a global supply overhang weighed on markets, while talk of a potential producer meeting to discuss propping up prices lent some support but was met with scepticism by analysts. Traders said that markets were being weighed down by an ongoing supply overhang in crude and refined fuel products, while a suggested meeting by oil producers was unlikely to result in a significant market tightening. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), is trying to drum up support for a producer meeting to decide measures that would buoy oil prices. "We are actively promoting a meeting of producers, which we estimate could take place in the coming weeks, so that OPEC and non-OPEC countries can sit down to see what the scenario for the winter looks like," its oil minister Eulogio del Pino said this week. The last time producers met to discuss measure to tighten oil supplies and prop up prices, in April, OPEC members were not able to agree on any measures. Analysts said they did not expect more success from a potential future meeting. Several U.S. states studied by S&P Global Ratings are ill-equipped to deal with an economic recession, hampered by the slow rebound in U.S. economic growth after the damage wrought by the Great Recession. Fiscal imbalances, slower state tax revenue growth and increased spending on social services have contributed to a challenging economic landscape, as real GDP has only increased at 2.1 percent per year since 2009, S&P said in a report issued on Tuesday. Real U.S. GDP growth of 2.43 percent in 2014 and 2015 compared to pre-recession rates of 3.79 percent in 2004 and 3.35 percent in 2005, according to data from the World Bank. [/QUOTE]
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