The week that was in currency markets…By james tweed • Aug 14th, 2012 • Category: Currency
Tuesday 14th Aug EU – GDP for the region as a whole, German GDP, France/Spain – CPI
UK – CPI
US – Retail Sales
Wed 15th Aug UK – BOE minutes of the last meeting, July Unemployment
US – CPI
Thurs 16th Aug EU – CPI
UK – Retail Sales for July
US – Jobless claims
Fri 17th Aug EU – PPI
US – Consumer sentiment
Thank you for downloading the foreign exchange market report podcast for August 13th from Coracle Online and Crossbar fx.
While the world has been hooked on Olympic glory for the past couple of weeks, the economic headlines have changed little. There are fresh fears about economic slowdown and global growth forecasts have been lowered as China is no longer growing as fast as it was.. In other words, nothing has really changed, the news is nothing new. What is transpiring is that Economic data is backing up what many in the markets predicted years ago, and with increasing alarm as the evidence filtered through that the situation is worsening. Central banks and governments continue to do the only thing they can, if they wish to remain elected, or at least keep the ship afloat on their watch: and that is to keep printing money.
Optimism about the ECB’s potential intervention in the Government bond markets has begun to fade, French industrial output stagnated in June, and a larger than expected drop in Germany’s industrial output and exports all signal that the 17 member EU bloc is sliding into recession. Could this trigger the ECB to cut interest rates?
China revealed import and export growth slowed considerably in July, although this wasn’t altogether unexpected. If global growth and demand is slowing, China does at least not have the home-grown market to sustain the sort of economic growth figures we became used to a couple of years ago.
In the UK, Sterling gained support after the Bank of England signalled a further interest rate cut was unlikely, even as it cut growth forecast for 2012 to zero. The UK’s Trade deficit is now at a 15 year high. The trade gap widened sharply in June rising to £4.7 billion from £2.7 billion in May. While the problems persist in the Eurozone the situation for Britain’s exporters looks bleak. Employment is now being closely watched: if the demand for goods and services continues to weaken employers will be forced to make redundancies. 2.8 million is the current unemployment figure and we seem set to reach the 3 million that was predicted as the likely bottom. Perhaps, like Team GB, we will out-perform the predictions and start looking on the brighter side of life? Let’s hope so…