Fundamental Headlines
• Home Starts Boost U.S. Stocks Futures – Wall Street Journal
• BoJ Doesn’t See Threat in Yen Rise – Wall Street Journal
• Renewed Hopes for Recovery Stiffen Resolve - Financial Times
• Housing Starts in U.S. Increased Less Than Economists Forecast Last Month - Bloomberg
• King Obliged to Explain Inflation Plan as Rate Exceeds 3% for Fifth Month- Bloomberg
GBP/USD: Annualized consumer prices in the U.K. slowed in July to 3.1 percent from 3.2 percent the month prior. Indeed, the headline rate of inflation remained above the Bank of England’s target of 2.0 percent and lead the central bank’s Governor, Mervyn King to write a letter to the government explaining how policy makers will bring back consumer prices to its target. Going forward, the increase in the value added tax rate from 17.5 percent to 20.0 percent which will take place next year will likely put upward pressure on inflation. GBP traders will now shift their focus to the BoE minute which is expected to be released tomorrow. To discuss this and other reports, please visit the GBP/USD forum.
EUR/USD: German economic sentiment for the month of August fell to its lowest level in year as weaker than expected economic reports from China, the U.S., and ongoing concerns in Europe continue to weigh on investor confidence. Figures plunged to 14.0 from 21.2 in July, while the current situation index soared to 44.3 to mark its highest reading since January 2008. As governments in the 16 member euro area continue to battle their ballooning budget deficits, imports of German goods will likely scale back and in turn cause a negative spillover effect onto other sectors in the Europe’s largest economy, which will weigh on confidence. In the currency markets, the EUR/USD has extended yesterday’s advance and has reached an intraday high of 1.2917 following the better than expected economic sentiment reports in the Euro-Zone, while housing starts and building permits in the U.S. failed to meet expectations. To discuss this and other reports, please visit the EUR/USD forum.
Written by Michael Wright, Currency Analyst
To Receive Future Articles by Email, please contact me at mwright@fxcm.com
Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
