U.K. Private Investment Dries Up, Putting Recovery in Doubt

[B]Fundamental Headlines[/B]

[I]• China Frets Over Inflation – Wall Street Journal
• World Trade Volume Climbs 2.5% – Wall Street Journal
• Eurozone lending to business squeezed– Financial Times
• Yen Rallies as China’s Industry Curbs Stoke Growth Concern; Metals Decline – Bloomberg
• Housing Data Point to Market Turnaround as Buyers Help Buoy U.S. Economy – Bloomberg[/I]

[B]
EURUSD[/B] – Data out of the Euro-Zone presented conflicting stories as we saw an improvement in consumer sentiment without a corresponding rise in consumption. The GFK German consumer confidence reading rose to 3.7 which was a 15 month high, while Italian sentiment jumped to 111.8 from 107.5. However, the Euro-Zone retail PMI reading for August declined to 47.1 from 47.3 as consumers continue to retrench. Across the board declines led by apparel and food sales supports recent comments from ECB member Mersch that the economy will be at risk when public spending dissipates. Discuss the topic and your trade ideas in the EUR/USD Forum.

[B]GBPUSD[/B] – U.K. home prices rose by the most since 2006 as the housing market continues to stabilize. Prices increase by 1.6% in August according to Nationwide LLC, in the country’s biggest lender’s. An increase in mortgage approvals is supporting demand and allowing sellers to raise their asking prices. However, the BoE concerns over lending to small businesses was justified, as we saw a drop in business investment by 10.4% in the second quarter. The decline surpassed economist forecasts of -3.6% as the private sector saw a 16.8% drop in investment versus -4.4% the prior three month period. Also disconcerting is the 188% free fall in investment from public companies which may only get worse as tax receipts continue to dry up. Discuss the topic and your trade ideas in the GBP/USD Forum.