FTSE 100 slumps to worst week in nearly three years

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IN THE UK

FTSE 100 slumps to worst week in nearly three years on growth woes
Sterling hovered near a two month high against the euro on Friday, supported by concerns that the Eurozone’s debt problems may overwhelm two of its larger economies.
RBS shares shed 6.9% after the part-nationalised lender posted a pre-tax loss of £678mn pounds in the second quarter.
Sterling was up 0.2% against the dollar on Friday at $1.6297, finding its footing after falling 1.0% the previous day when the dollar rallied broadly on the back of intervention by Japanese authorities to sell the yen. Data from mortgage lender Halifax showed UK house prices rose in July, but also indicated that the housing market was unlikely to improve further through the end of the year. Analysts said sterling could come under selling pressure this week if the BOE cuts its growth forecast in its quarterly inflation report.

ELSEWHERE

European shares open lower continuing their two week slide after S&P cut the US prized AAA credit rating by one notch.
Nikkei slides over 2% on US downgrade
On Friday US jobs data beats expectation but growth woes linger
Over the weekend The European Central Bank steps in to buy Spanish and Italian debt bonds, this morning that has seen the spread between Spanish/Italian and German Bond yields drop by over 100 bps showing the intervention is working thus far. 7% is seen as the critical level and currently Spain and Italy seen theirs back in the late 4/early 5’s.
The US dollar struggles this morning after the weekend’s decision by Standard and Poor’s to drop the US’s credit rating. The move had been warned and many felt it came as no surprise but this morning EURUSD has broken $1.44 again and GBPUSD sits near 2 month highs.
US treasury’s Tim Geithner hits out at S&P saying the decision showed “stunning lack of knowledge of US fiscal budget math' and terrible judgement
Gold hits the lofty heights of 1716, demand for the higher yielding currencies continues to fall, GBPUSD now up at 1.58 (10 cents in a week) and NZD is dropping too

DATA TO LOOK OUT FOR

Pretty quiet day in terms of data releases today includes Sentix Investor Confidence in the Eurozone, a fall is expected as conditions dry up amidst the recent down turn in activity and debt problems.
UK RICS Housing price balance (Jul) released tonight, expected consensus -25 slightly better than the previously released -27
Japan Money Supply M2+CD (YoY) (Jul) consensus view 2.9%
BOJ Monetary Policy Meeting Minutes
No data from the US today although the US will remain in the spotlight after S&P announcement over the weekend. Keep an eye out for any news from the other ratings agencies and tomorrow’s Fed meeting.

Current Spot Rates (9.30am)
USD EUR AUD CAD CHF DKK NOK HKD SEK ZAR JPY
GBP 1.6422 1.1448 1.5832 1.6110 1.2446 8.5330 9.0039 12.8150 10.58 11.38 127.764
USD 1.4330 0.9399 0.9674 0.7782 5.2236 5.3960 7.80 6.39 6.80 79.891
EUR 0.7012 1.3401 1.3794 1.1096 7.4479 7.6938 11.12 9.12 9.69 113.910

Key Support and Resistance Levels
Support Resistance
GBPUSD 1.5780 1.6085 1.6620 1.6475 1.6550 1.6750
GBPEUR 1.1013 1.1261 1.1390 1.1574 1.1614 1.1723
EURUSD 1.3840 1.3940 1.4050 1.4380 1.4540 1.4700

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FTSE 100 slumps to worst week in nearly three years

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