In the UK falling petrol prices has lowered Inflation for the second month during June, however this was still higher than the BOE had expected as they have a target of 2%. The Office for National Statistics said annual consumer price inflation eased to 3.2 % last month from 3.4 % in May, after prices rose 0.1% on the month. Sterling rose on this news but as inflation is not falling as much as they had hoped and core CPI was joint-highest on record, it seems that there are price pressures more seriously engrained. Things do not bode well for the UK as the job shortage is likely to last for the next five years, even if we avoid the double-dip recession, by 2015 the unemployment level might be at 2.5m which may seem like a mild growth but would actually mean a long period of job deficit.

Euro is still fighting back, passing its second borrowing test Greece has managed to get the market funding at a slightly cheaper cost than the 5.0% it pays to borrow under the 110 billion euro loan put in place by the IMF and EMU. Although it was hit a touch by the weak German Wholesale price Index yesterday, it managed to gain strength again. The EU have said that they will publish the results of the stress tests from more than 90 European banks on the 23^rd of July as they want ‘maximum transparency’ over the ‘elements of vulnerability’ that will show up from these results.

Sterling is up against dollar this morning due to the news that the trade deficit widened unexpectedly in May, apparently growing to $42.3 billion which is the largest since November 2008. This revelation made the estimates for the second quarter economic growth drop back even though there are sign of increased demand both from the US and abroad. The reason for the trade gap come from a boost in China’s imports, which is putting pressure on the Obama administration who are already suffering from the falling economy and stagnant jobs market.

It is an extremely busy day data wise today, giving the markets no time to calm down, focusing on the UK in the morning from 9:30 with Average Earnings, Jobless Claims and lastly the Claimant Count rate which measures unemployment in the UK as well as indicating the health of the labour market. This then turns into the EMU churning out Consumer Price Index and Industrial Production at 10:00. The US then wakes up with a bang from 13:30 with Retail Sales  and the FOMC minutes later in the evening. Hang on to your hats, things might get rocky.