MORE WOES FOR EURO
There seems to be more misery for the Eurozone as the likeliness of stagnation looms. This is in stark contrast to the US which continually posts strong growth figures.
The dollar is headed to the highest close in four years as today’s GDP figures are estimated at 4.6% for the second quarter; up from previous 4.2% estimates. Yellen, and the FED are on target to close the book on their asset buying programme next month and possibly raise interest rates by the middle of next year.
Draghi on the other hand will be looking to embarking on full blown QE as further interest rate cuts in the Bloc have failed to generate the activity the economy needs.
Recent weeks have seen Markit’s purchasing managers’ index suggest that Germany, the Eurozone’s biggest economy, is at risk of a third recession. The survey also shows that France is likely to be in recession after failing to grow in the first half of the year. France is now trying to shake off the title of the new sick man of Europe.
The recent run of bad news suggests European officials may opt for larger asset purchases and could be granted more leeway by German policymakers, who have typically been opposed to such measures.
Elsewhere: The yen fell, approaching the weakest in six years versus the dollar, on speculation Japan’s government will push ahead with reforms that would allow the nation’s $1.2 trillion pension fund to buy more overseas assets.
Data of note out today USD GDP, USD Price Index and Consumption Expenditures.
Roll on next week when hopefully we will have more to write about!