U.K. and German Industrial Porduction Miss Estimates Raising Growth Concerns

Fundamental Headlines

• Banks, U.S. Spar Over TARP – Wall Street Journal
• Lending Squeeze Drags On – Wall Street Journal
• Japan unveils $80.6bn stimulus plan- Financial Times
• Bernanke Signals Fed Will Keep Outlook for `Extended Period' of Low Rates – Bloomberg
• Emerging-Market Stocks Decline on Rating Concern, Led by Dubai; Yen Climbs-Bloomberg


EUR/USD –  German Industrial production in October unexpectedly fell by 1.8% following three straight months of positive gains. The drop in activity follows a 3.1% improvement in September as manufacturing and mining contracted by 1.6%. A 3.5% drop in capital goods investment is a sign that optimism is waning as companies refrain from purchasing machinery and buildings as the future remains uncertain. The results added with yesterday’s surprising drop in factory order or Europe’s largest economy supports the ECB’s dovish stance. President Trichet following the central bank’s last policy meeting made it clear that the committee views interest rates appropriate. To discuss this and other ideas visit the EUR/USD forum.

GBP/USD – U.K. industrial production was flat in October versus expectations of a 0.5% gain as the economy struggles to sustain output. A 2.4% drop in fuel refinery offset a 2.6% improvement in chemicals ending its two month slide. Textiles did an about face with a 2.3% drop following a gain of 4.9% the month prior which could be a result of lower expectations for the Holiday season. Meanwhile, the CBI industrial trends for December improved to -42 from -45 but the negative reading points to continued struggles for producers.      To discuss this and other ideas visit the GBP/USD forum.