(menafn – ecpulse)
Another week is to end today, while markets are fluctuating heavily with the start of the final session, where markets are waiting services data from the euro zone for more confirmations whether the region is slipping into another phase of recession, ahead of the closely watched jobs report from the worlds largest economy.
The European common currency as seen yesterday was able to recover most of the losses incurred earlier, where after the European Central Bank rate decision and Draghis press conference the euro rebounded supported by the downbeat services data from the worlds largest economy, which sent the dollar south supporting high yielding currencies to rebound.
Mario Draghi, the European Central Bank President, reassured yesterday that downside risks to growth remain evident, revising inflation projections over the coming period higher, where the President clarified that inflation will remain above the target in 2012, yet it will retreat with the start of 2013 below the 2% target.
Regarding the fiscal reforms, the President welcomed the efforts made by Spain, where the Spanish government has made a good progress in providing structural reforms; however, Draghi clarified that the tension in the debt market have curbed economic activities, which was clear on the manufacturing and services sector in April.
Today, services weakness are to join other indicators in signaling a coming recession, awaiting the confirmation by growth data, which most probably will be negative showing a contraction in the first quarter, where the sharp contraction in manufacturing and services in addition to the increase in unemployment are consequences of the debt crisis, which returned to affect the confidence and the sentiment, indicating that recession is around the corner.
Retail sales indexes are also expected to add concerns spending are weakening in the euro-area region, reflecting a deterioration in the sentiment and confidence, which improved slightly with the start of this year.
Moreover, major companies from across the old continent are to report their financial results today, starting with the Royal Bank of Scotland, Lafarge, Legrand and Linde. BNP Paribas, the largest bank is France, reported profits beating estimates in the first quarter of 2012, which might trigger slight positivity ahead of the expected fundamentals.
However, the main focus today remains the U.S. jobs report, where all markets will be tracking any changes in the conditions of labor market, which might indicate at a strong recovery in the U.S.; however, despite the speculation of an addition of 165 thousand new jobs, the ADP report on Wednesday showed that the private sector added less than expected jobs, which might give indications the jobs report might also miss estimates today.
We expect a volatile session today, where markets will be fluctuating before the jobs report from the U.S., while investors will tend to close their positions ahead of the coming week, especially as the French and Greek elections are taking place this weekend.
