European Economic Confidence Weakens in May
• Greek Minister Defends Steps – Wall Street Journal
• Euro-Zone Inflation Picks Up – Wall Street Journal
• Economic Woes Bring Russia and Europe Closer - Financial Times
• European May Economic Confidence Unexpectedly Slips, Inflation Accelerates - Bloomberg
• Trichet Says Emerging Nations Are a Source of Strength for World Economy - Bloomberg
EUR/USD – European loans to companies and households in April posted their first annual advancement in eight months, with figures showing a 0.1 percent rise from a year earlier after falling 0.2 percent in March. At the same time, another report showed that the M3 money supply, a gauge of future inflation used by the ECB tumbled an annualized 0.1 percent amid expectations of 0.3 percent as the bloc’s sovereign debt crisis continues to undermine its recovery from the worst recession since the second world war. Meanwhile, economic confidence in the 16-member euro area unexpectedly worsened in May as the region struggles to gather strength after Greece budget crisis forced governments to step up spending cuts to reduce deficits. Figures showed that confidence slip to 98.4 in May from 100.6 the previous month, marking the second time that the reading has weakened in the past five months, while services declined to 3 from a upward revision of 6 in the same time period. Nonetheless, across the news wire overnight, central bank president Jean-Claude Trichet did not comment on the recent Fitch downgrade of Spain’s long-term foreign and local currency issuer default ratings (IDR) to “AA+” from “AAA.”The downgrade comes to no surprise as the rating agency anticipates that the economic adjustment process will be more difficult and prolonged for economies with AAA rated sovereign governments. To discuss this and other topics, please visit the EUR/USD forum.
Written by Michael Wright, Currency Analyst
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