Gloom emanating from the US continued to strengthen the US dollar yesterday as trouble brewed on Capitol Hill and in the jobs market. The 3 main automakers in the US have been petitioning Congress for $25bln of funds in order to stave off Chapter 11 bankruptcy; reports suggest however that representatives left the nation’s capital with empty hands. This brought equity bourses sharply lower in late trading; the DJIA falling by 5% with similar figures seen on the NASDAQ and S&P 500.

The US jobs market also took a pasting yesterday as it emerged that the Initial Jobless Claims figure for the week ending 15 November rocketed to 542,000 with Continuing Claims breaking through the 4mn barrier which has not happened in the past 2 recessions that the US has experienced. Some unemployment figures are the highest they have been since 1983 and with increasing pessimism over the world’s largest economy circulating further records can and will be broken.

Dollar also strengthened against sterling yesterday as crude oil fell to below $50 for the first time in 3 years and is now 1/3 of its high this summer. Further falls in the price are predicted with options premiums for protecting falls below $40-$45 rising by 90% overnight. An extraordinary meeting of OPEC will take place in Egypt next week and production cuts will be on the agenda as they try to bolster their members’ budget deficits.

Retail sales in the UK fell by a better than expected 0.1% yesterday although this was not enough to stop sterling’s slide throughout the day and should not be viewed as the dawn of a recovery but more likely the postponement of the inevitable.

Today is a fairly quiet data cycle and we will look towards oil and equity bourses for direction.

Have a great weekend.

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