European Investor Concerns Grow As Budget Troubles Continue

Fundamental Headlines

• Fed to Bare Tightening Plan – Wall Street Journal
• G-7 Leaders Split on Finance Regulation – Wall Street Journal
• Traders cautious as contagion fears linger - Financial Times
• Weak Dollar Illusory as Correlated Trading Shows Gains Since Bretton Woods – Bloomberg
• Corporate Bond Yield Spreads Widen the Most Since November: Credit Markets - Bloomberg


EUR/USD –  European investor confidence in February  fell to -8.2 from -3.7 the month prior. It was the first decline in sentiment in seven months. Budget troubles in Greece, Portugal and Spain has started to raise concerns in the region and across the global investing community. Additionally, the pace of growth in the service and manufacturing sector has showed signs of slowing as government stimulus is ending.  The ECB left their benchmark interest rate unchanged last week as they continue view growth and inflation risks balanced.  To discuss this and other topics, please visit the EUR/USD Forum.

USD/CHF –  Swiss retail sales rose 3.1% in December from the month prior and 4.7% from the end of 2008 as improving global demand is generating domestic growth. Food sales rose 2.0% on the month leading broad based gains. Swiss companies benefiting from an increase in exports have started to bring back laid off workers as the unemployment rate unexpectedly fell to 4.1% from 4.2% in January. Economists were looking for a rise to 4.3% as labor trends are anticipated to lag growth as concerns over a slowdown in growth linger. The SNB appears to have tried to depreciate the Swiss franc over the past week in an attempt to make goods more attractive to foreign consumers.