The biggest news from today’s European session came out of England, where the BoE’s inflation report cut inflation and growth forecasts and Governor King said the bank will use asset purchases as its central stimulus tool because interest rate cuts are counterproductive. King’s comments sent the British Pound soaring 90 points against the US Dollar to 15650.
However, Sterling’s jubilation did not spill over to Euro trading, which is down 0.35% against the US Dollar in today’s trading. European stocks are also trading lower in today’s session.
Out of Germany, exports were down 1.5% in June, as increased exports to other regions failed to outweigh the waning demand from Euro countries. On the positive side, Deputy Parliamentary Leader of Merkel’s Christain Democratic Party Michael Meister said yesterday that Bundesbank’s Weidmann won’t derail German backing for ECB plans. This suggests that Merkel’s government might back Draghi’s bond purchase plan despite the mixed messages from Germany.
In other European news, Spain revised their 2012 deficit-to-budget target to 4.5% from 3.5%. Also, German industrial production dropped 0.9% in June, which was slightly more than expected.
Over the session, EURUSD slowly dropped from 1.2400 towards 1.2350, where a 9-year upward trend line has provided support. Over the past few weeks, the pair has trended higher after initially reaching 2-year lows.
EURUSD 15-minute: August87, 2012
--- Written by Benjamin Spier, DailyFX Research
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