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TradeTheNews.com European Market Update: US Payroll data to provide vital clue for sustainability of global recovery

European Market Update: US Payroll data to provide vital clue for sustainability of global recovery
***Economic Data***
- (SP) Spain May Industrial Output NSA Y/Y: 5.1% 2.9% prior; Industrial Output WDA Y/Y: 3.3% v 2.6%e
<b>- (SP) Spain Jun Net Unemployment M/M: -83.8K v -65.0Ke</b>
- (NO) Norway Jun Unemployment Rate: 2.8% v 2.8%e
- (HU) Hungary Apr Final Trade Balance: &#8364;504.7M v &#8364;526M prior
- (IT) Italy Q1 Deficit to GDP (year to date): 8.7% v 5.2% prior
- (HK) Hong Kong May Retail Sales Value Y/Y: 19.7% v 17.3%e; Retail Sales Volume Y/Y: 16.2% v 13.8% e
- (UK) Jun PMI Construction: 58.4 v 58.5e
- (EU) Euro Zone May PPI M/M: 0.3% v 0.3%e; Y/Y: 3.1% v 3.1%e
- (SA) South Africa Jun Naamsa Vehicle Sales Y/Y: 20.7% v 28.6% prior
<b>- (EU) Euro-Zone May Unemployment Rate: 10.0% v 10.1%e
- (IT) Italy May Unemployment Rate: 8.7% v 9.0%e</b>

*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM **
<b>***Top Press Headlines***</b>
- (CH) People's Daily comments on demand for the Agricultural Bank of China's IPO; According to the report, the IPO has been more than 10 times oversubscribed by institutional investors.
- (AU) Australia government reaches agreement with miners; Tax to be 30% for iron ore and coal, to be cut to 29% from 2013-14 but no further
- Various European unemployment data better-than-expected in session (Spain, Italy and Eurozone)
- China PBoC continues to honor pledge and sets Yuan higher again

<b>- European equities</b> are mostly higher, but well off of the session's best levels, as the focus now shifts to the US monthly payrolls report. As of 5:45 Euro Stoxx 50 Index +0.2% at 2,523 ; DAX Index +0.2% at 5,870; CAC-40 Index +0.1% at 3,343 and FTSE 100 Index 0.4% at 4,824

<b>Consumer Discretionary</b>
- UK Retailer John Lewis reports weekly LFL sales 13.3% for the week ending 26th June
- Lagardere to pursue IPO for Canal + France unit following failure to reach agreement with Vivendi regarding Lagardare's 20% stake sale
- Travis Perkins provided trading update: H1 revenue +4.7% y/y; like-for-like +3.4%
- Marshalls provided trading update H1 Rev &#163;170M v &#163;166M y/y

<b>Industrials</b>
- Chloride board intends unanimously to recommend acceptance of the cash offer by Emerson.
- Novolipetsk Steel reported Q1 Net $132M v loss $193.6M y/y, Rev $1.7B v $1.3B y/y
- Daimler reitereates target to exceed 100K unit sales in China for FY10; could have record sales volumes in June for US

<b>Materials</b>
- Akzo Nobel plans to double current revenue in China within a 5-year period (implies $3B)

<b>Energy</b>
- Areva wins Sellafield Storage facility contract; total project budget to exceed &#163;250M. Contract awarded in a consortium with Amec and Balfour Beatty.
- Total reported that traces of asbestos were found at Lindsey refinery fire. Lindsey capacity is at 223K bpd

- Speakers:
- (EU) M<b>onetary & Affairs Commissioner Rehn:</b> Does not rule out the orderly insolvency of Euro states - German press
- (GE) Germany Finance Min <b>Schauble</b>: There is agreement in G20 that there must be restructuring process for financial firms
- Poland Central Bank revised 2010 and 2011 GDP and inflation forecasts higher
- China end of March foreign debt: $443.2B (+3.4% q/q) - SAFE
- <b>China's SAFE:</b> To "optimize" currency composition of fx reserves; has dollar, euro, yen and emerging market currencies in fx portfolio
- (PH) Philippines Central Bank Guinigundo: Country's monetary policy continues to remain appropriate but heading towards tightening

<b>- Currencies/Fixed Income:</b> Overall the session was quiet ahead of the key US employment data. More than 200K temporary census jobs are expected to roll off in the June data, so the focus will again likely be on the Change in Private Payrolls. The CHF was broadly weaker against the majors. A RBS analyst called for a 'tactical retreat' from the recent euro lows among its major pairs and some model-related funds appeared to have agreed on the view. EUR/CHF continued with it's rebound from fresh all-time lows set on Thursday at 1.3070 and rallied above 1.3350 today. EUR/USD hovering around the 1.25 handle. European peripherals spreads continue to narrow after finding some relief in the recent ECB 3-month LTRO and 6-day MRO operations. USD/JPY loitering at the pivotal 88.00 neighborhood (now acting as resistance)

<b>- Geo-Political:</b>
- Germany's lower house approved legislation extending the naked short selling ban.
- Spain Prime Minister Zapatero is to meet with the IMF Chief Economist today. -
- UK Deputy Prime Minister Clegg announced 5th May of 2011 as the date to vote for referendum on electoral system.

<b>- In The Papers:</b>
-London's Telegraph Ambrose Evan's Pritchard: Debt crisis may force country to tap the EU-IMF rescue fund over the next 2-3 months. Article cited a 'confidential report' by Bank of America Merrill Lynch analyst and implied that the potential request for aid could lead to political turmoil.
- WSJ says part of the reason why the UK government's budget cuts have been well received is that the reductions have not been clearly spelled out
- (US) The recent slowing in the US economy has led to speculation that the US dollar could have passed its peak - London Telegraph; According to a currency analyst at Saxo Bank "today could be a turning point for the dollar, as concerns about the US economy and US deficit might finally trump concerns regarding fiscal problems in Europe."

***Looking Ahead***
- (RU) Russia Jun Official Reserve Assets: $459.0Be v $456.4B prior
- (BE) Belgium May Unemployment Rate: No est v 8.2% prior
<b>- 8:30 (US) Jun Change in Nonfarm Payrolls: -130Ke v +431K prior; Change in Private Payrolls: +110Ke v +41K prior; Change in Manufacturing. Payrolls: +25K e v +29K prior
- 8:30 (US) Jun Unemployment Rate: 9.8%e v 9.7% prior</b>
- 8:30 (US) Jun Avg Hourly Earning M/M: 0.1%e v 0.3% prior; Avg Weekly Hours: 34.2e v 34.2 prior
- 10:00 (US) May Factory Orders: -0.5%e v 1.2% prior
- 17:00 (CO) Colombia Jun Producer Price Index M/M: No est v 0.5% prior; Y/Y: No est v 1.3%

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