Despite Ongoing Concerns

U.K. GDP first quarter reading showed worse than expected contraction, adding to concerns the British economy needs more time to recover amid the escalating European debt crisis and weak consumer demand. The preliminary reading was downwardly revised to 0.3% contraction from both advanced and expected readings of -0.2%, while on the year 0.1% contraction was recorded from both flash and estimated readings of 0.0%. Details with the release showed that the quarterly drop was triggered by the drop in exports to 0.1% from 1.6% while imports, on the other hand, advanced 0.4% from 0.9%. In fact, the drop in exports reflect the weak demand from the euro area, U.K.’s main trading partner, and worldwide in addition to the strengthening sterling in the first quarter. Gross fixed capital ...

The Weekly Bottom Line : 19/05/2012 HIGHLIGHTS OF THE WEEK United States - Global economic concerns ratcheted up this week. Widespread discussion of a Greek exit continued, Spanish banks faced rating downgrades and periphery sovereign debt yields moved higher. - Financial markets have responded to these global worries with increased risk aversion. The S&P is poised to end the week 3% lower, and 10-year treasuries are yielding just 1.7%. - U.S. economic data has proved somewhat more encouraging, but growth is still struggling to breakout beyond a moderate pace. This has kept the possibility of additional monetary stimulus alive even if the threshold remains quite high. Canada - Recent economic indicators are showing a resurgence of strength in the Canadian economy. Strong ...

USD is Preferred Haven USD remains firm ahead of today's FOMC minutes and amid ongoing EU concerns. UK PM Cameron put the situation in the euro area rather succinctly saying that "it either has to make up or face a potential breakup". The dollar index is continuing its ascent towards mid-January highs after breaking a medium term bear channel. Economic data due out shortly incldes April housing starts which are forecast to gain by 4.7% m/m, building permits which are anticipated to fall by -4.5% m/m, and industrial production which is expected to show growth of 0.6%. The minutes from the April 24-25 FOMC meeting will be released at 1400ET and will provide insight into the whether or not the Fed discussed additional measures. EUR is nearing the 2012 lows against the USD as the euro ...

Forex Morning Briefing : Euro consolidates as election concerns ease What’s new: Asia: Asian and US equities mixed as concerns ease but doubts linger France: Hollande expected to push for growth; Germany will does not intend to renegotiate fiscal compact Greece: Parties attempting to form coalition Government; if not elections may be as early as June Spain: Spanish Government looking into bailing out the third largest bank Forex: EUR/USD consolidates at 1.30 Forex: Aussie pressure by trade deficit ahead of Government budget Rates in Asia and Indices: EUR/USD 1.3011 1.3066 -0.26 % USD/CHF 0.9196 0.9233 -0.24 % GBP/USD 1.6147 1.6199 -0.25 % USD/JPY 79.83 80.08 0.08 % EUR/CHF 1.2012 1. ...

The Weekly Bottom Line HIGHLIGHTS OF THE WEEK United States - U.S. job creation may have weakened in the last few months, but the grounds for sustaining stronger employment growth are more fertile now than have been since the economic recovery began. Europe's labor market, by contrast, is likely to deteriorate further before it gets better. - Europe's (nonfinancial) corporate sector is highly leveraged. As balance sheet adjustments are made, Europe risks further decreases in investment, higher layoffs, and lower economic growth. These effects are compounded by deleveraging in the public sector. - U.S. corporations, by contrast, are more profitable and liquid than they have ever been. At some point some of these funds will be unleashed towards new investment, creating a positive ...

(Reuters) - Euro zone factories sank further into decline last month but manufacturers in Asia upped their tempo to meet growing demand from the United States and China, exposing a widening gulf between Europe and the rest of the world. Worryingly for European policymakers, a downturn that is hitting Italy and Spain hard, now appears to be taking root among core members France and Germany. The data hit the euro and dented optimism following a similar survey on Tuesday that showed the pace of growth in U.S. manufacturing picked up much more than expected. "The numbers coming out of the euro zone give no cause for comfort. The China economy is holding up, but the debt crisis in Europe is weighing on growth and its rippling across the world," said Peter Dixon at Commerzbank. "Global ...

(Reuters) - Brent crude was steady around $119 a barrel on Thursday, as optimism over a recovery in the U.S. economy offset easing concerns of a disruption in Iranian oil exports and high U.S. crude stocks. The U.S. Federal Reserve said on Wednesday it would support growth in the world's top oil consumer if necessary as it left the door open for another round of monetary easing, raising hopes of higher energy demand. "The Fed's comments are supporting crude oil prices, despite a higher-than-expected U.S. inventory figure," said Miguel Audencial, a trader with CMC Markets in Sydney. Brent crude slipped 11 cents to $119.01 a barrel by 0425 GMT after settling up 55 cents at $119.12 on Wednesday. U.S. crude edged down 4 cents to $104.08. The benchmark settled at $104.12, up 57 cents. ...

Still, concerns are spreading in markets with mounting speculations Spain and Italy would eventually ask for an international bailout as they will be unable to improve their fiscal stance. After bailouts provided to Greece, Portugal and Ireland, it seems that the debt dilemma is intensifying as the contagion spread to large euro area economies which probably caused euro area members to expand the European permanent rescue fund and global economies to raise funds to combat the lingering effects of the crisis. Worries sparked after the rise in Spanish 10-year bond yield above 6% at the beginning and the end of the week, as this level is close to 7% which forced euro area peripheral nations to ask for international aid, despite the ECB intervention through buying Spanish debt. Spanish ...

(Reuters) - Gold rose towards $1,645 an ounce on Friday as a better-than-expected German business sentiment survey lifted the euro versus the dollar, but trading was light as investors awaited further news on the euro zone crisis and U.S. monetary policy. Spot gold was up 0.1 percent at $1,643.03 an ounce at 1010 GMT, while U.S. gold futures for June delivery were up $3.00 at $1,644.40. Prices are set to fall 1 percent this week despite holding within their narrowest weekly range in more than a year. A well-received reading of the German business climate lifted the euro, pulled safe-haven Bund futures off earlier record highs and boosted European stocks, reflecting a cautiously optimistic tone to the markets. .EU But gold is struggling for direction as buyers await the outcome of ...