This morning's UK industrial production data was a rather large miss to the downside, with June figures revealing a -0.5% MoM contraction in activity compared to the consensus estimate of +0.1%. However, in spite of being a disappointment compared to consensus, the year on year data (+1.3% vs. +1.9% expected) is still consistent with the very strong Q2 GDP release we got last week (that first estimate assumed a 1.0% QoQ expansion in industrial production).

Much better than expected industrial production data has been responsible for much of the subsequent upward revisions to UK GDP readings in the past few quarters so we may not see such increases on this round of readings; but today's print alone is still not a disaster for the broader UK recovery story.   Today's non-farm payrolls will be a keenly awaited release for currency markets as the correlations between the both USD and risk, along with Treasury yields and USDJPY continue to prove key drivers. 

Consensus estimates are looking for a drop of -65k jobs in July (last month's print -125k), and the unemployment rate is expected to tick upwards to 9.6% (from 9.5% in June). We do feel that this soft patch is simply a temporary lull in the trajectory of the US economy, and that going forward the risks are skewed to upside surprises in US data. We still favour USDJPY longs as a core medium and long term trade, and eye a return to 90.00 levels by the end of the year.

Today's Key Issues (time in GMT):
12:30 USD Non-farm payrolls (Jul), exp: -65k, prev: -125k
12:30 USD Unemployment (Jul), exp: 9.6%, prev: 9.5%.
11:00 CAD Unemployment rate (Jul), exp: 7.9%, prev: 7.9%