Fundamental Headlines
[I]• FDIC Prepayment Likely for Banks – Wall Street Journal
• China Inc. Looks Homeward for Profits– Wall Street Journal
• BNP Paribas in €4.3bn capital-raising – Financial Times
• Emerging-Market Stocks Advance Most in a Week; European Shares Fluctuate – Bloomberg
• Home Prices in U.S. Probably Fell at Slower Pace, Consumer Confidence Rose -Bloomberg[/I]
[B]EURUSD– [/B]Euro-Zone retail sales contracted for a 16th month according to the PMI reading of 48.6. However, it was the highest the gauge has been since its last expansion as consumers have started to loosen their wallets as signs of an economic recovery mount. Positive growth in French consumption helped offset weakness in Germany which saw sales fall. Meanwhile, economic confidence in the region rose to its highest level in 12 months at 82.8 in September following a reading of 80.8 the month prior. Consumer confidence also rose to -19 from -22 which surpassed estimates of -21. Building optimism on the back of slower job losses has helped stabilize domestic growth, but the ECB remains cautious and is hesitant to end stimulus efforts until broader growth returns. To discuss this and other ideas visit the EUR/USD Forum.
[B]
GBPUSD–[/B] The final reading for 2Q U.K. GDP showed that the economy shrank less than originally expected. The 0.6% contraction was upwardly revised from 0.7% as an increase in government spending helped pick up the slack for declining household consumption. An upward revision in exports also adds to evidence that the global economy is improving and demand from abroad should help fuel future growth. Meanwhile, U.K. mortgage approvals remained firm with 52,317 in August compared to 52,404 the month prior as the housing market continues to show signs of stabilizing. However, consumer credit remains constrained as bank are still reluctant to return to a normal lending environment as they try and rebuild their balance sheets. The BoE has continues to express concern over tight lending standards which has lead them to leave the door open on future quantitative easing efforts. To discuss this and other ideas visit the GBP/USD Forum.