[B]Talking Points
• Japanese Yen: Back Below 110
• Euro: Drops Rally’s on Liebscher’s Comments
• British Pound: Factory Gate Prices Rise To Highest On Record
• US Dollar: No U.S. Data on tap[/B]
[B]Talking Points
• Japanese Yen: Back Below 110
• Euro: Drops Rally’s on Liebscher’s Comments
• British Pound: Factory Gate Prices Rise To Highest On Record
• US Dollar: No U.S. Data on tap[/B]
Euro and Pound Gain on U.K. Producer Prices and ECB’s Liebscher Hawkish Comments.
After falling below 1.500 for the first time since February 27, the Euro rallied above 1.5050 on hawkish comments from outgoing ECB council member Kluas Liebscher. The veteran policy maker reiterated the MPC’s focus on p[rice stability and said that there was no time for complacency with regard to inflation and interest rates. Although, he would confirm that here is no bias at the current time for the central bank, but that the medium term outlook was for prices to reach higher.
The Pound would fall to 1.19108 its lowest level since November, 2006 before finding support. The sterling would rise over 100 point before the producer price release, as the inflation report was expected to show inflation continue to rise. Also, core prices rose higher than the 6.5% expected to 6.7% as rising energy costs spread to other areas including chemicals and base metals. Although, the prices at the factory gate rose to its highest level at 10.2%, it was less than the 10.2% that was expected. Additionally, the 0.6% fall in input prices may signal that slumping growth and falling oil prices is beginning to slow inflation. This may clear the path for the BoE to cut their benchmark rate as they try and head off a recession. Meanwhile, the country’s trade balance deficit increased to -£7.6 billion as rising imports offset a slight increase in exports, showing that consumer consumption has remain resilient despite the housing slump and slowing economy.
The U.S. economic calendar is empty which could leave price action at the mercy of broader economic winds. Dollar weakness could continue as oil has firmed on the back of the geopolitical risk emanating from the Russian-Georgian conflict. Also, expectations for the upcoming U.S. retail sales report are diminishing as the effects from the government’s fiscal stimulus plan abates. Traders may start to price in the lower expectations fro domestic growth.
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