Broker's notes: Markets stuck in a range

Sterling

Sterling cut gains against the dollar and the euro on Friday after much weaker-than-forecast UK services sector data raised concerns that economic growth could falter later in the year. British service sector activity grew at its slowest pace since April 2009, with a marked fall in hiring as employers worried about an economic slowdown and public spending cuts, a purchasing managers' survey showed. Technical charts signal that the key support for the pound is at $1.5322, the 38.2 percent retracement of the May to August rally, just below Tuesday's five-week low of $1.5327.

Euro

Euro zone retail sales increased for a third successive month in July, offering more signs that consumers are opening their wallets and boosting the chances of the economic recovery continuing. Sales across the 16-nation currency bloc edged up 0.1 percent from June and rose by a faster-than-expected 1.1 percent year-on-year, the European Union statistical office Eurostat said on Friday. The data was another sign that consumer morale may be strengthening, auguring well for the euro zone to continue to recover from its worst crisis in decades.

Gold

Gold prices traded firm in the early deals on Thursday, with buyers cautious on the physical market, as investors wait for key U.S. job data due later in the day for further clues on health of the economy. Data released on Thursday showed a surprise rebound in pending sales of previously owned homes in July, as well as a fall in new jobless claims last week in the U.S. Despite the market's bullish sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust fell for the first time in a week on Thursday with a sizable decline of 9.12 tonnes, the largest one-day drop since late July.

US employment

The US non-farm payrolls data are due at 4.30 PM UAE time. Reuters poll of economists hint that US employment likely fell for a third straight month in August as more temporary census jobs ended and cautious businesses scaled back hiring, an outcome that could pressure the Federal Reserve to prop up growth. It is expected that non-farm payrolls could come in at -100,000 after declining by 131,000 in July. Against the backdrop of weak data such as housing, larger-than-expected job losses last month could heighten fears the economy is sliding back into recession and push the Fed -- the U.S. central bank -- closer to launching a fresh round of bond buying. Jobs scarcity is hurting consumer spending, which normally accounts for about two-thirds of U.S. economic activity, leaving the recovery from the worst recession in 70 years sputtering. Growth slowed markedly in the second quarter and Fed Chairman Ben Bernanke has said the central bank stands ready to take fresh measures to support the economy if needed.

Oil

Oil fell on Friday for the first day in three as markets await the data while Hurricane Earl neared the country's east coast, fuelling concerns of disruptions to refineries and demand during the Labor Day long weekend. Atlantic storms in the past few weeks have veered north, staying away from oil and gas production and refining infrastructure in the Gulf of Mexico. The US Energy Information Administration said that Hurricane Earl could affect 1.1 million barrels per day of U.S. operable refinery capacity on the Atlantic coast, or about 7 percent of the nation's total. Total U.S. petroleum inventories are at their highest since weekly records began in 1990. In a market where fuel supplies remain ample, a disruption to refineries might prove to be bearish for oil prices as less crude would be processed. Earl may also curb demand for motor fuel from holidaymakers who stay away from the roads as the U.S. driving season comes to a close this weekend.

Source: Richcomm Global, Dubai