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Expectation The Euro ContinuesTitle:
The UK Is Back In Recession
GDP data for the first quarter of this year was worse than expected and fell by 0.2% vs. the 0.1% expansion that was expected. As we mentioned in our preview yesterday, the construction sector was a major drag on growth declining by 3% in the quarter, after declining by 0.2% in Q4 2011. This is concerning since the UK winter was fairly mild, which is usually good for the construction sector.
Industrial and manufacturing production was also weaker, falling by 0.4% last quarter, although this was an improvement from the 1.3% decline in Q4. The services sector expanded by 0.1%; however this was not enough to balance the weakness from other sectors of the economy.
The BOE has said it believes that the GDP figures are underestimating the strength of the UK economy and there is a chance that ...
Title:
Dukascopy Morning Forex Overview : 25/04/2012
Fundamental Analysis
EUR
"Equities are stronger than in the fall, as central banks have moved to support the market with liquidity and removing the structural risks to banks"
- Hans Peterson, the chief investment officer of SEB Private Bank
Industrial new orders in the euro zone declined by more than forecast in February, Eurostat data showed on Tuesday. Orders decreased by a seasonally adjusted 1.3 per cent, after declining 2.9 per cent in January.
USD
"Overall, consumers are more upbeat about the state of the economy, but they remain cautiously optimistic"
- Lynn Franco, director of the Conference Board Consumer Research Center
U.S. consumer confidence declined in April as consumers became slightly less optimistic on the outlook of the country’s economy, the Conference Board Inc. ...
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AUD fell after weak CPI figures
FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)
WORLD
The Australian dollar suffered after Australia‘s Q1 CPI inflation report came in much weaker than expected. Headline inflation fell sharply to +1.6% y/y (cons. 2.2%, prev. 3.1%). Market expectations had already been lowered by yesterday’s PPI report, but the scale of the miss was still surprising, and AUD promptly dropped 70pips. The rates market had previously priced in a full 25 bp cut from the RBA on May 1, but is now looking for 32bp of easing at the time of writing. Our Australia economists doubt it will come to that – instead they stick to their view that a full 50 bp of easing is indeed on the way, but will be spread evenly between the May and June RBA meetings.
ECB policymakers continued to make their voices heard overnight with ...
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European Market Update : 23/04/2012
Political uncertainty in Europe weights upon risk appetite; Major European PMI data disappoints
Economic Data
(EU) ECB: €311M borrowed in overnight loan facility v €335M prior; €775.7B parked in deposit facility v €746.5B prior
(FR) France Apr Business Confidence: 95 v 96e; Production Outlook: -14 v -15 prior; Own-Company Production Outlook: -4 v +8 prior
(FR) France Apr Preliminary PMI Manufacturing: 47.3 v 47.4e; PMI Services: 46.4 v 50.1e
(CH) Swiss M3 Money Supply Y/Y: 6.6 v 6.4% prior
(CH) Swiss Q1 Real Estate Index Family Homes: 410.4 v 404.6 prior
(NL) Netherlands Apr Producer Confidence: -3.3 v -2.6 prior
(DE) Germany Apr Advanced PMI Manufacturing: 46.3 v 49.0e; PMI Services: 52.6 v 52.3e
(EU) Euro Zone Apr Advanced PMI Manufacturing: 46.0 v 48.1e; PMI Services: 47.9 v 49.3e; ...
Title:
UK Q1 GDP to Put the Brakes on More QE
The Week Ahead
Highlights
UK Q1 GDP to put the brakes on more QE
French political risk comes to a head
Italy and Spain turn attention to fiscal targets
BOJ to back up rhetoric with action
FOMC still in wait-and-see mode
Market Moves
UK Q1 GDP to put the brakes on more QE
The major data release in the UK this week will be the preliminary Q1 GDP reading. There is considerable uncertainty around this figure due to some strong data in the services sector, especially retail sales, balanced by some disappointments in the manufacturing and construction sectors. Retail sales for March rose 1.5%, more than the 0.4% expected. This was mostly due to the effects of good weather boosting demand for clothes, footwear and gardening equipment. This helped to reverse some of the ...
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Weekly Economic and Financial Commentary : 20/04/2012
U.S. Review
Look Past the Monthly Volatility and See the Trend
This week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy that is growing at a modest pace. The milder-than-usual winter likely brought some activity forward and below-consensus readings are due in part to payback. Housing starts, existing home sales and industrial production all posted disappointing readings in March that are likely not indicative of the underlying trend.
Headline retail sales, however, came in more than double the consensus estimate in March, ending the first quarter on a positive note.
Early Spring Brings Payback Period
The full week of economic releases painted a somewhat mixed picture, but the underlying trend still reflects an economy ...
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Sterling Strong, Yen Under Pressure
The euro (EUR) edged lower yesterday as world equities turned negative and after a Spanish government bond auction failed to impress the markets. Fears about Italy's debt problems returned to the markets after a report from Italy that the country would not be able to balance its budget by 2013 and cut its growth forecasts for 2012. Both Spain and Italy remain vulnerable to rising government bond yields. Against the greenback, the euro slid as low as 1.3068 from 1.3165 and today the pair rebounded to trade at 1.3163.
The US dollar (USD) was stronger against a basket of currencies during the Asian session but later weakened after softer than expected US economic data. Against the Japanese yen (JPY), the greenback rose as high as 81.73 from 81.26 as the yen continues to be weighed by ...
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Asian stocks drop on worries over EU, US growth
Asian stocks dropped on the last session of the week, where the MSCI Asia Pacific Index dropped 0.5% to 124.10 at 13:28 in Tokyo, heading for a 0.8% decline this week, on worries over the US recovery.
The US released disappointing jobs data on Thursday and showed weakness in the housing sector, which damped sentiment and lowered investors’ appetite for risk, as it raised doubts over the strength of the US recovery.
Meanwhile the Spanish better-than-expected bond auction on Thursday failed to ease worries over the region’s debt crisis, as yields continue to be elevated fueling that Spain may follow Greece, Ireland and Portugal in needing an international bailout.
While cautious is seen building as Greek banks, including National Bank of Greece and Alpha Bank, are due to report 2011 ...
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Asia Session: More Evidence That The RBA Will Cut Rates Next Month
Equity markets in Asia couldn't overcome the negative sentiment overnight stemming from poor US data. Weak housing data, jobless claims and manufacturing data for the US overshadowed a reasonable Spanish debt sale and strong US earnings. Given that the gains for stock markets throughout the world early in 2012 were largely underpinned by better than expected US data, especially in relation to the labour market, any signs of economic weakness in the world's largest economy will prove to be very detrimental to investor sentiment. Nonetheless, the FX market wasn't hit as hard, but increasing expectations of weak trade prices data out of Australia weighed on AUD.
Export prices in Australia slid 7.0% during the first quarter of 2012, which was more than double the expected 3.0% decline and ...
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