he Euro pulled back on Friday and slipped to a low of 1.2980 during the overnight trade as investors scaled back their appetite for risk, and the shift in mark sentiment could lead the EUR/USD to retrace the advance from earlier this week as the economic docket is expected to show the world’s largest economy expanding at a slower pace in the second quarter.
Talking Points
• Japanese Yen: Rallies Across The Board
• Pound: Halts Six-Day Advance
• Euro: CPI Estimate Rises To Highest Since 2008
• U.S. Dollar: 2Q GDP on Tap
Meanwhile, Ireland’s central bank said that the recovery in the Euro-Zone may “moderate somewhat” in the second-half of 2010 as governments operating under the fixed-exchange rate system tighten fiscal policy and target their budget deficit, and went onto say that “the risks to the growth outlook over the medium term appears on the downside, given the potential for the consolidation to have a bigger-than-expected impact on growth in both the euro area and the global economy more generally.”
As a result, the European Central Bank is widely expected to hold the benchmark interest rate at the record-low of 1.00% next week, and President Jean-Claude Trichet may continue to hold neutral outlook for future policy as he expects to see an “uneven” recovery paired with subdued price growth. Nevertheless, the economic docket showed household spending in Germany tumbled 0.9% in June amid forecasts for a 0.2% decline, while the unemployment rate for the Euro-Zone held steady at a 12-year high of 10.0% for the fourth consecutive month. At the same time, the CPI estimate for the region increased to an annualized pace of 1.7% in July from 1.4% in the previous month, which is the highest reading since November 2008, but the ongoing slack within the private sector paired with the weakness in the financial system is likely to weigh on price growth over the coming months as the Governing Council maintains a dovish bias for inflation.
• Japanese Yen: Rallies Across The Board
• Pound: Halts Six-Day Advance
• Euro: CPI Estimate Rises To Highest Since 2008
• U.S. Dollar: 2Q GDP on Tap
Meanwhile, Ireland’s central bank said that the recovery in the Euro-Zone may “moderate somewhat” in the second-half of 2010 as governments operating under the fixed-exchange rate system tighten fiscal policy and target their budget deficit, and went onto say that “the risks to the growth outlook over the medium term appears on the downside, given the potential for the consolidation to have a bigger-than-expected impact on growth in both the euro area and the global economy more generally.”
As a result, the European Central Bank is widely expected to hold the benchmark interest rate at the record-low of 1.00% next week, and President Jean-Claude Trichet may continue to hold neutral outlook for future policy as he expects to see an “uneven” recovery paired with subdued price growth. Nevertheless, the economic docket showed household spending in Germany tumbled 0.9% in June amid forecasts for a 0.2% decline, while the unemployment rate for the Euro-Zone held steady at a 12-year high of 10.0% for the fourth consecutive month. At the same time, the CPI estimate for the region increased to an annualized pace of 1.7% in July from 1.4% in the previous month, which is the highest reading since November 2008, but the ongoing slack within the private sector paired with the weakness in the financial system is likely to weigh on price growth over the coming months as the Governing Council maintains a dovish bias for inflation.
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