Germany sees surprising surplus in Public Spending
The annual rise in GDP was slightly lower than an expected. However, public spending saw a surplus in 2012 for the first time in five years. Exports were the main driver for the German economy in 2012, according to the Federal Statistical Office. Consumer spending and government spending increased in 2012. The German economy has been affected by the Euro debt crisis plaguing the region. The European Central Bank has previously forecasted a gradual recovery for the Euro-zone economy well into 2013.
Meanwhile, British house prices held steady last month and were predicted to increase over the coming year as a whole, the survey of property professionals showed, with the institution’s own forecast for 2013 putting price growth at 2%.RICS noted that the FLS contributed to a gradual reduction in interest rates on some mortgages, attracting buyers.
On the other hand, Treasuries traded higher on Tuesday after U.S. Federal Reserve Chairman Ben Bernanke warned the economic recovery was at risk from the battle to raise the nation’s borrowing limit. President Barack Obama on Monday added to the tension over debt ceiling talks by refusing to trade cuts in government spending for a lifting the borrowing limit, which is needed to avoid a potentially disastrous default on U.S. debt.
On the FX Markets, according to the latest CFCT data, investors remained somewhat cautious on GBP and EUR. EUR fell back into net short territory at –USD 1.3bln following a USD 2.2bln decline and for GBP, there was a fall of USD 1.1bln and hence it continues to be held net long USD 2.6bln. Going forward, the GBP/USD is set to remain a by-product of the newsflow relating to the Eurozone, which despite the last week’s rally that saw EUR/USD top the 1.3300 level, risks falling off the proverbial cliff yet gain. In terms of technical levels, supports are seen at 1.6005, 1.5992 and then at 1.5988. On the other hand, resistance levels are seen at 1.6200/55 and then at 1.6275 which is the 30-day upper Bollinger level.
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