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BoE Keeps Rates on Hold as Economy Cools, Prices Rise; Trichet Employs Hawkish Rhetoric Ahead of ECB Rate Decision

Thursday, 07 August 2008 10:58:21 GMT

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Written by Christopher Vecchio, DailyFX Research

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Fundamental Headlines

•    GBPUSD – The Bank of England left its benchmark interest rate at 5.00 percent this morning, as the economy continues to show downside growth potential and prices remain inflated. Economic conditions remains bleak for the Britain, recent data shows. Consumer confidence dropped the most in four years to 51; economic growth in the second quarter slowed to 0.1 percent; and industrial production is down 1.6 percent from a year ago. BoE Governor Mervyn King recently predicted that inflation will double its 2.0 percent target. The bank is likely to cut rates at some point in the near future to help spur growth, though not until inflation subsides. Discuss the topic and your trade ideas in the GBP/USD Forum.
•    AUDUSD  – After a decline of jobs in May ended eighteen consecutive months of gain, the Australian labor force has rebounded in June and July. After rising by 22,200 people in June, the number of people employed rose by 10,900 last month. Buoyed by a resources boom in Western Australia, initial indicators show that Australia will report a 20 percent climb in export income. China and India have been the main importers of materials, helping drive Australian exports to A$23 billion. Despite cooling domestic growth, expansion by mining companies has fortified economic growth for the near future. For more news and resources, visit our Australian Dollar Currency Room.
•    USDJPY – Amid the global economic slowdown, Japan noted its first ‘double-drop’ in machine tool orders in over six years. Domestic and overseas orders fell, combining for a 2.5 decrease. Nevertheless, total orders remained above ¥100 billion for the 50th month in a row, and overseas orders in June were the second-highest ever. Even as economists speculate Japan is heading towards its second recession in the past nine years, Japanese industrials still show robust output. Discuss the topic and your trade ideas in the USD/JPY Forum.

•    Chrysler, Nissan in Talks to Team Up on Key Cars (link) – Wall Street Journal
•    Mortgages Made in 2007 Go Bad at Rapid Clip (link) – Wall Street Journal
•    AIG and Freddie Damp Recovery Hopes (link) – Financial Times
•    Barclay Beats Profit Estimates, Increases Credit (link) – Bloomberg
•    Trichet Focuses on Inflation as Lufthansa Lifts Wages (link) – Bloomberg

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