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Fears that the US economy is weakening and may drag the rest of the world into a double dip recession resulted in a shocking week for global equities, which plummeted on a slew of bad news. The FTSE 100 closed at 4,838, a drop of 4.1% on the week, while the US Dow Jones fell 4.5% on the week to close at 9,686.

The US unemployment rate in June fell unexpectedly to 9.5% from 9.7% in May. However, the decline was not the result of a rise in the number of employed workers. Instead, the estimated size of the labour force fell in June and as people stopped looking for work, the number of people counted as unemployed went down. Total nonfarm employment fell by 125,000 (consensus -135,000).
 
The US dollar weakened against major currencies last week, reversing the trend of recent months when bad economic news caused the USD to strengthen on flight to safety concerns. The simple and not unreasonable explanation for the shift in trading is that the US dollar has become more sensitive to weaker US growth prospects. A number of high profile US economic releases have disappointed recently, including lower readings on consumer confidence, the labour market and housing data.