The German Zew survey rose more than expected to 31.1 from 13.0, against expectations of 20.0 as the outlook for the global economy continues to improve. Soaring equity markets and the ECB initiating quantitative easing measures after bringing their benchmark rate to a record low 1.00% has also help fuel optimism.
[B]Fundamental Headlines[/B]
[I]• Local Banks Face Big Losses – Wall Street Journal
• Canada Banks Aim to Show Prudence Pays – Wall Street Journal
• US oil prices regain $60 a barrel level– Financial Times
• Morgan Stanley, JPMorgan, Goldman Said to Apply to Repay TARP – Bloomberg
• Libor Falls Most in Four Months Amid Signs of Banking Recovery – Bloomberg[/I]
[B]EURUSD [/B]– The German Zew survey rose more than expected to 31.1 from 13.0, against expectations of 20.0 as the outlook for the global economy continues to improve. Soaring equity markets and the ECB initiating quantitative easing measures after bringing their benchmark rate to a record low 1.00% has also help fuel optimism. However, a drop in the current situation component to -92.8 from -91.6 shows that the region remain in a deep contraction following the first quarter’s 2.5% decline in GDP. Indeed, construction output fell by 1.0% in March following a 0.6% decline the month prior underlining the current weakness. However, ECB member Tumpel-Gugerell was on the wires stating that the central bank has done all that it can with interest rates despite acknowledging that the crisis is far from over. Discuss the topic and your trade ideas in the EUR/USD Forum.
[B]GBPUSD[/B] – U.K. CPI eased more than expected to 2.3% from 2.9% in March supporting the BoE’s prediction that inflation will fall below their 2% target and remain there until 2012. The depreciation in prices was more than the 2.4% that was expected by economists and the lowest in 15 months. April saw fuel & light costs fall by 2.8% followed by a 0.7% drop in home values. Housing prices have been the biggest drag on the index as they have fallen by 12.1% on an annualized basis. A 5.2% fall in clothing costs demonstrates the impact the recession has had on consumer consumption, but the component has improved over the past five months which could be a sign that demand is building. The BoE minutes are due out tomorrow and will show the central bank’s reasons for adding another £50 billion to their quantitative easing measures. For more news and resources, visit the Pound Currency Room.