The IFO survey, which measures the views of 7,000 executives in Germany, showed business confidence falling quicker than expected in August. However, after the significant drop in the ZEW survey the day before, the general feeling was that the reading could have been a lot worse. The survey reading of 108.7 was also still significantly above the long term average of 101. This lends some support to Germany’s Bundesbank view that Germany’s economy would continue to grow in the second half of 2011 – but “somewhat more slowly” than before. France this morning pre-empted any attack on its sovereign debt by giving the go ahead for a new austerity budget - this comes before the normal release in September. At the same time, GDP predictions were scaled back to 1.75% from 2% this year, and 2.25% in 2012. The hope is that increased taxes will allow the country to meet its deficit target of 4.6% of GDP.
The August CBI Distributive Trades survey today will be more interesting than usual given that it will cover the period of riots in the UK. The riots did much to reduce retailers’ inventories, but little to boost their sales. Back in July, retailers predicted a further slowdown in retail activity with the expected balance falling from July’s surprisingly soft -5, to -12. Given that the headline balance is not seasonally adjusted, such a decline would merely reflect the summer hiatus. We remain surprised that the consensus forecast is for a slightly stronger reading, as the rioting in August is likely to have pushed sales down further, as stores closed earlier than usual. It seems that there is ample room for disappointment today. At the moment, the currency markets are very choppy but the Euro is strengthening as the periphery keeps out of the headlines. The markets are left waiting for Ben Bernanke, the head of the FEDs speech this Friday to give direction. There is a small hope that another round of QE may be announced but this seems unlikely. Therefore, it would appear to be a bit of a no win situation on Friday, as the FED has ran out of tools to encourage stimulus.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.
Posted in Daily Market News on May 30 2014
The Flash European PMI reading for August showed signs of stagnation in the third quarter for the Euro zone. Manufacturing has started to contract, dropping below 50, and business expectations saw a significant drop. This suggests that there could be some down side risk to the initial flash estimate.VIEW FULL ARTICLE
Posted in Daily Market News on Aug 24 2011 by alex