• The High Cost of Raw Materials – Wall Street Journal
• U.K. Recovery Loses Its Momentum – Wall Street Journal
• Greek aid request bolsters risk appetite - Financial Times
• Greece Asks EU to Trigger Bailout Agreement - Bloomberg
• Stocks, Euro Gain After Greece Asks for EU, IMF Bailout; Greek Bonds Rise - Bloomberg
GBP/USD – U.K. GDP grew 0.2% in the first quarter missing expectations of 0.4%, signaling that the economy isn’t out of the water yet. The tepid growth validates the government’s stance that more stimulus efforts are needed. The country’s budget deficit is already at the highest level since WWII which has threatened its sovereign debt credit rating. The upcoming elections will have a big impact of future measures as the challenging Conservative party is expected to look to cut spending with Prime Minister Gordon Brown advocating continuing measures to avoid a double dip recession. Looking at the breakdown of the report we see that weakness continues to come from the service and construction sectors which underscores the weakness in the domestic economy, as growth is being driven by demand from abroad. To discuss and other topics, please visit the GBP/USD forum.
EUR/USD – The German IFO business sentiment survey jumped to 101.6 from 98.2 surpassing estimates of 98.7. Germany appears poises to come out of the crisis on a strong note as Euro weakness is fueling already strong demand from aboard for exports. Business leaders are also optimistic about the future as the expectations component of the gauge improved to 104 from 102. Meanwhile, Euro-Zone industrial new orders rose 1.5% beating estimates of 1.0%. However, the major headline for the region overnight was Greece asking the E.U. to trigger a 45 billion euro bailout, which helped Greek bonds regain their footing and eased fears of broader implications. To discuss and other topics, please visit the EUR/USD forum.