UK unemployment lowest in 6 years

Today's Highlights

• German data universally disappointing

• UK unemployment lowest in 6 years

• Sharp fall in EU industrial production

• BOE hints at rate hike delays

FX Market Overview

Before we start, can we wish all your children who are awaiting their A Level results the very best of luck. I am not sure the financial markets can match the pre-results tension. Monday and Tuesday were quiet on the forex market but Wednesday surely made up for it.

Where to start!

The euro weakened across the board after EU industrial production fell for the 2nd month in a row; reigniting the debate about why the European Central Bank isn't printing money to keep the economy afloat. They have scope to do so after German inflation dropped to its lowest level in 4 years, matching similarly poor data from across the Euro sharing bloc. This morning's news that the German economy shrank for the first time since 2012 was not helpful to the Euro's cause but may force the ECB's hand.

Sterling dropped sharply in spite of good employment data but reacted more to poor wages growth and the Bank of England downgrading their growth forecasts and suggesting that the slow pace of wage price inflation and low retail inflation were causing pause for thought over interest rate hikes. As mentioned in previous reports, I suspect we will not see any interest rate hike until the middle of 2015. There is no discernable reason for the BOE to hike rates when inflation is below target, there is no wage pressure, growth is slow in all but the property sector and some manufacturing sectors and the inability of many got obtain a mortgage is enough to keep the lid on most of the UK property market. Sterling was a cent lower against the Euro and fell similarly against most other currencies. These are great Sterling buying opportunities.

The US Dollar was still strong against the Pound and euro in spite of poor US retail sales which were at their poorest in 6 months. The fragility of the US recovery is laid bare by such reports but the fears over strife in Iraq and between Russia and the European Area is enough to keep the USD strong for now.

The Canadian Dollar strengthened a little after resale house prices rose by 4.9% on the year. That is a slight acceleration from last month's 4.4% and shows some strength returning to parts of the Canadian economy.

We saw the prospects of an extended period of cheap money strengthen share prices in Asian markets overnight. We also had further evidence that the UK housing market is slowing. The RICS house price balance for July dropped back to the low seen in February of +49. That was below forecasts and serves as another warning to the BOE. That wasn't lost on David Miles, a member of the Bank of England's Monetary Policy Committee, who warned that the bank won't be hurrying to hike interest rates.

I continue to be amazed at how stupid some criminals are. 20 year old Florida student, Pedro Bravo, argued with his roommate over an ex-girlfriend. That led to a fight and Pedro alegedly killed his roommate, Christian Aguilar, but was unsure where to hide the body. So he did what every young person does these days, he asked SIRI on his IPhone. "Siri, I need to hide my roommate" "What kind of place are you looking for?" asked Siri "Swamps, reservoirs, foundries, dumps." Was Pedro's answer. All of this was recorded in the Phone's memory and helped police to compile their case against Pedro. It's astonishing what mobile phones can do these days and what they remember. Big Brother in your pocket.