After a challenge on 1.40 in early Europe on Tuesday, the Euro dipped after a weaker than expected German business confidence survey with the ZEW index falling to 39.5 for July from 44.8 the previous month. This was the first monthly decline sine October and, although the data is still substantially higher than in late 2008, the decline will tend to reinforce fears that the Euro-zone economy will not be able to secure a convincing recovery.
The US retail sales data failed to have a substantial impact as it was close to expectations. Headline sales rose 0.6% in June after a 0.5% increase the previous month while there was a 0.3% underlying increase in sales. Overall confidence in the economy will still be fragile and the latest IBD consumer confidence index also recorded a monthly decline.
The producer prices data was stronger than expected with a 1.8% monthly increase while core prices rose 0.5% and Treasury yields edged higher following the data. In this context, the consumer inflation data could trigger additional volatility on Wednesday.
US Treasury Geithner looked to promote a strong dollar in public comments as markets continue to fret over the risk of long-term diversification away from the US currency.
The Euro again looked to challenge 1.40 after the US data with risk appetite supported by stronger than expected second-quarter earnings from Goldman Sachs. The currency was still unable to make any headway above this level and dipped to lows near 1.3910 in New York as European currencies in general came under selling pressure before rallying back to 1.3960.
By: Darrell Jobman
No comments:
Post a Comment