Australia GDP Falls Short of Expectations, Services Contracts for Fifth Month

[DailyFx]

Fundamental Headlines

• Chinese Banks Cut Fannie, Freddie Debt – Wall Street Journal
• Japan, Chicago Join on Derivatives Efforts – Wall Street Journal
• Abu Dhabi Takes Fortunes to Hollywood – Financial Times
• Ford Picks Odell to Run Volvo, Tightening Control of Last European Brand – Bloomberg
• Ospraie Plans to Shut $2.8B Hedge Fund After 38% Decline This Year – Bloomberg

• EURUSD – Euro-Zone retail sales rose less than expected, crossing the wires at -0.4% versus 0.1% forecast. Meanwhile, the yearly figure improved slightly, rising to -2.8% from a revised reading of -3.2% in June. The breakdown showed a sharp rise in food, drink, and tobacco sales, which suggests that discretionary spending may falter as consumer face higher living costs. The preliminary GDP reading for the Euro-Zone was revised lower to 1.4% from 1.5% from the initial reading. Meanwhile, the quarterly growth figure was unchanged from the advanced reading of -0.2%. The breakdown of the report showed that household spending fell 0.2%, while gross fixed capital formation slid to -1.2% from a 1.5% reading in the previous quarter. For more news and resources, visit our EUR/USD Forum.

• GBPUSD – U.K. consumer confidence was unchanged from July’s record low reading of 52. Higher living costs paired with fading employment opportunities continues to leave consumers doubtful about future growth prospects. A separate report showed that retail prices increased to 3.8% from 3.2% in July, heightening upside inflation risks for the weakening economy. For more news and resources, visit our GBP/USD Forum.

• AUDUSD – Second quarter GDP figures rose less than expected to 2.7% from 3.3% in the last quarter, and missing expectations of a 2.9% increase. The report showed that private sector spending has fallen to a six-year low, while the unemployment rate ticked higher to 4.3%. Furthermore, the service sector contracted for the fifth consecutive month, with the index falling to 39.9 from 42.8 in July. As economic activity continues to deteriorate in the $1 trillion economy, market participants expect the RBA to remain focused on downside growth risks, and have already raised bets that the central bank will cut the benchmark interest again in the coming months. For more news and resources, visit our Australian Dollar Currency Room.

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