Japan's unemployment rate rose to a record 5.7% in July and deflation got worse further hurting Prime Minister Taro Aso chances of winning the upcoming election on Sunday.

  • The unemployment rate is the highest since the government began collecting the data in 1953 and it exceeded analysts forecast of 5.5%.  According to a board member at the Bank of Japan, policy makers should prepare to fight a long-term battle with deflation.  He also added that the central bank of Japan cut the interest rate to 0.1% and has very little tools to deal with inflation and economic growth in the short term.
  • The Japanese yen fell against most of its major counterparts on the back of the high unemployment rate and lower consumer prices.  The euro advanced higher versus the greenback on growing evidence Europe is emerging from its worst recession.  The currency has gained 0.7% this month and is heading for a second monthly gain against the US dollar.
  • The US preliminary GDP came in better than expected at -1.0% for the second quarter, adding to signs the recession is easing.  FOMC member Lacker spoke yesterday and sees the economic outlook improving, but recovery to be slow and uneven.  Crude oil prices rose in the US trading session spiking as high as $73 after dipping as low as $69.80 a barrel.

Currency to watch out for: GBPUSD & USDJPY

  • The GBPUSD pivot point is at 1.6325 with a preference to enter into short positions at 1.6315
  • The USDJPY pivot point is at 94.00 with a preference to enter into short positions at 93.95

Today's calendar and market movers:

  • UK Revised GDP quarter on quarter expected to remain unchanged at -0.8%
  • EU Consumer Sentiment expected to rise to -21
  • US Personal Spending month on month expected to drop to 0.3%
  • US Revised University of Michigan Consumer Sentiment expected to rise to 64.6

Stocks:

  • US stocks closed higher on Thursday as oil prices jumped and Boeing led the Dow Jones higher.  The three major indexes finished higher 0.2 to 0.4%.
  • As of 06:00 GMT the Nikkei is trading at 0.41% and the Hang Seng at -0.49%.