U.K. Economy Contracted Less Than Expected But BoE Continues To See Risks

Fundamental Headlines

• Deere Posts Loss, Revenue Falls 28%  – Wall Street Journal
• Tiffany Raises Outlook – Wall Street Journal
• Fed sees risks in low rates policy - Financial Times
• Aussie Dollar, Metals Rise on Evidence of Economic Rebound; Stocks Advance – Bloomberg
• German Banks May Have to Write Off Another $136 Billion, Bundesbank Says -Bloomberg

EUR/USD –  German consumer confidence unexpectedly fell to 3.7 from 4.0 according to Gfk. Economists were forecasting that sentiment would hold steady as Europe’s largest economy continues to show signs of improvement. However, concerns that growth may stall once government stimulus programs come to an end has started to dim the outlook for future growth. Those fears have increase policy makers willingness to maintain the current low interest rate environment. To discuss this and other ideas visit the EUR/USD forum.

GBP/USD – The U.K. economy contracted 0.3% in the third quarter according  to the preliminary GDP reading. The shortfall was less than the initial reading of -0.4% as private consumption was stronger than expected. Consumer spending was flat for the period which was revised higher from -0.6%. The quarterly report also showed exports rise to 0.5% from -1.4% but missed economists forecast for a revision to 1.4%. The service sector which accounts for 70% of GDP remain unchanged at -0.1% as hotels and restaurants continue to struggle as Britons remain cautious. BoE Governor Mervyn King said the U.K. economy faces “profound challenges” which has raised speculation that the central bank may add to their asset purchase program. To discuss this and other ideas visit the GBP/USD forum.