Markets are jittery once more regarding further losses and credit market writedowns while banks still are strict in lending each other as liquidity is their primary concern. The focus is on the manufacturing performance again while weekly claims that have rise in influencing market movement is as well on the queue.
Important figures are to be delivered today for us from across the globe. The was with the Swiss National Bank announcing their rate decision as expected steady at 2.75% as inflation is also on the rise in the economy and they already raised reserve requirements to lid excess money supply, and on the back of that the Swiss Franc lost its early trading strength which it had triggered as market credit woes encouraged investors to indulge in unwinding to carry trades which the Franc with the yen are considered as financing currencies for such operations.
The focus on the UK economy will be on the budget deficit, that the EC said will widen above the allowed limit and exceed 3.0% of the GDP as government tax cuts add pressure along side slowing receipts as the labor market slows. While Money Supply the gauge of inflation is expected to have slowed in May while still that maybe a bad indication to liquidity performance in UK.
As for Britons acceptance to the economic situation, their spending is expected to continue weak, as retail sales for May are projected to have dropped as they are suffering below inflation wages and rising commodity prices. King said late last night that the BoE will apply all means necessary to anchor inflation and that the economy should slow to lid inflation. His comments were directed to households and their inflation expectations and as well to businesses to trim what second round effects might bring as he accepts lower living standards for Briton in exchange for dampening inflation saying It will not be an easy time, and I know that some families will find it particularly difficult''.
Moving across the Atlantic, we have more on inflation today as Canada is to announce their Consumer Price Index as its expected to have picked up pace in May to an annual 1.9% while the core level is expected to remain unchanged at an annual 1.5%.
For the US economy the usual Thursday impute is the weekly jobless claims expected to have declined to 375 thousands from 384,000 the previous week, which is still considered elevates approaching the upper marginal weak limit of 400,000. Meanwhile counting claims are also expected to decline a notch with 4,000 to 3135 thousands from the previous week.
Concerning the manufacturing performance and after the NY empire state manufacturing fell strongly above expectations the Philly Fed Index is expected today to also reveal ongoing weakness in the sector, though its expected higher at -10.0 in June after -15.6 yet contraction is still the sentiment in the sector influenced by a weak economy and sluggish domestic demand.
The Feds fear rising inflation with the influence of a depreciating dollar and surging commodities, while markets first absorbed the news as a higher yielding dollar the notion now is heading towards a prolonged rise to be seen in the economy that might in role keep inflation somehow in check as most importantly consumer expenditure which accounts for 2/3 of the economy will remain sluggish and that will take the expected rate hike if seen this year into the fourth quarter and not as some expect as soon as August.