Swiss Unemployment Rate Falls to a Yearly Low, German Industrial Production Rises 2.6%
• Trichet Warns of Uneven Recovery – Wall Street Journal
• IMF: Risks Slowing Recovery – Wall Street Journal
• Banks Holds course on Rates and QE - Financial Times
• Jobless Claims in U.S. Decreased More Than Estimated Last Week to 454,000 - Bloomberg
• IMF Raises 2010 Growth Estimate to 4.6% From 4.2%, Sees Risks to Recovery- Bloomberg
EUR/USD: Industrial production in Europe’s largest economy jumped 2.6 percent in May after climbing a revised 1.2 percent the previous month to exceed forecasts for a 0.9 percent. At the same time, the annualized rate soared 12.4 percent after rising 13.9 percent in April, according to the Economics Ministry in Berlin. Today’s figures points to increased production and economic expansion, which is indicative of further gains for the pound. Meanwhile, Germany’s foreign goods trade account narrowed an annualized 10.6 billion euros in May. Taking a look at the breakdown of the report, exports climbed 9.2 percent from the previous month, while imports jumped 14.8 percent. Going forward, as domestic demand in Germany is likely to remain weak, the country will rely on its exports. Nonetheless, the ECB kept rates at 1.00 percent as widely expected today. Market participants will now shift their focus to ECB’s President Trichet comments due out in 45 minutes. To discuss this or other topics, please visit the EUR/USD forum.
USD/CHF: The seasonally adjusted unemployment rate in Switzerland for the month of June fell to 3.9 percent from 4.0 percent the previous month, which was in line with economists’ expectations. Indeed, the increase in employment will be an important driver for the Swiss economy as the increase in the labor force fuels household spending. At the same time, weak inflationary pressures will provide another catalyst for disposable income. Looking ahead, investors are weighing in a zero percent chance that the SNB will hike rates at its next rate decision meeting on September 10th as inflation remains below the Swiss National Bank target rate of 1.0 percent.To discuss this or other topics, please visit the Swiss franc currency room.
Written by Michael Wright, Currency Analyst
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