New Zealand Dollar Falls While Inflation Expectations Hits 17 Year High

[DailyFx]

Fundamental Headlines

• Regulators Step Up Bank Actions – Wall Street Journal
• J.P. Morgan Could Face Fannie, Freddie Writedown – Wall Street Journal
• Citi Scraps Committee Headed by Rubin – Financial Times
• Oil Falls as Dollar Strengthens, BP Resumes Caspian Shipments – Bloomberg
• China May Turn to Bonds to Lift Stocks, Officials Says– Bloomberg

· EURUSD – German GDP contracted for the first time in four years, spurring recessionary fears for Euro-Zone. A breakdown of the report showed that business investments and construction spending had taken the biggest blow, while domestic and foreign demands continued to weaken. The German IFO Survey fell to a three year low as business confidence sank to 94.8 from 97.5 in July. The expectations component of the IFO survey slid to its lower since February 1993, while a separate report showed consumer confidence fell to a five year low of 1.5. For more news and resources, visit our EUR/USD Forum.

· NZDUSD – The Reserve Bank of New Zealand inflation expectation survey rose to 3.0% from 2.9% in the second quarter to reach a 17 year high. Amid the rise in expectations, market participants expect the central bank to hold a dovish outlook as the slowing economy will allow upside inflation risks to dissipate in the coming months. The New Zealand trade deficit widen in July to -78.10M from -207.0M due to a surge in imports. July imports rose to 4.40B from 3.80B, while exports dropped to 3.42B from 3.60B. For more news and resources, visit our New Zealand Dollar Currency Room.

· USDCHF– The UBS Swiss consumption indicator fell to 1.85 from 2.22 in June, marking its largest monthly decline since August 2007. The highest inflation in 15 years continues to sap purchasing power, leaving households with less to spend on discretionary items. However, upside wage risks may heighten inflationary fears for the Swiss National Bank, which may push the central to hold a neutral policy stance for the rest of the year. Discuss this and your trade ideas in the USD/JPY Forum.