Data Shows Euro Officially in Recession Pressuring Euro
Data Shows Euro Officially in Recession Pressuring Euro
GER Consumer Prices Down 0.2% in October
In Germany, October’s final release of CPI confirmed the preliminary release showing prices easing 0.2% on the month, while the annual rate also was unchanged from preliminary estimates of 2.4%. Prices are easing for consumers as the decline in commodity prices filters down to them as companies try to move inventory ahead of a holiday season with a grim outlook in sales.
EUR Annual Consumer Prices at 3.2%
Finalized inflation data from the Euro-zone matched preliminary estimates. The annual rate has eased to 3.2%, after peaking at a 16-year high of 4.1% in June.
EUR 2nd Consecutive Month of Contraction in GDP Means Recession
Data today also showed that the Euro-zone has slipped into its first official recession since the bloc was created in 1999. After contracting in the 2nd quarter, the economy shrank again in the 3rd quarter, with the GDP repeating the decline of 0.2%. Though the economy grew 0.7% annually, the two consecutive quarters of negative GDP growth pushes it into a recession as defined, and pressures the ECB to continue cutting rates in December.
EUR/USD - Euro Gives Back half of Yesterday’s Gains
After surging yesterday the Euro-Dollar reversed course, falling from its high near 1.2850 to set an intra-day low near 1.2610, about a 240 pips swing. From there it recovered to trade near 1.2750 during the NY afternoon session.
GBP/USD - Pound Stops its Slide, Trading Sideways Today
The Pound-Dollar which had been plummeting this week to the tune of 1,200 pips, finally found some support after setting a fresh 6-year low near 1.4560 yesterday. Today saw the pair trade sideways to end the week.
US Retail Sales Down Record 2.8%
Retail sales in the US dropped 2.8% in October, the largest decline since records began in 1992. Sales excluding autos were down 2.2%, which was also the worst drop on record. The sharp fall this month is the 4th month in a row that sales were negative as the US economy starts the 4th quarter in dismal shape. Consumer spending will continue to be restrained as long as the job market continues to deteriorate, and the value of stocks and homes fall leaving Americans less wealthy.
US Import Prices Slide 4.7%
With petro prices sliding 18.8% in October, the import price index is fell 4.7%, the largest fall in import prices in nearly 20 years. The last 3 releases have seen 3 of the 4 largest declines in the index since first published in December 1988. The sharp declines reduced the elevated annual rate to 6.7% in October. It had been 20.5% only in June.
US Inventories Decline, Consumer Confidence Slightly Higher in November
US business inventories fell by the most in 3 years in September as firms did not replenish stocks as they saw sales plunge and the economic outlook continue to deteriorate. The Reuters/UMich measure of consumer sentiment increased to 57.9 for the first half of November from the 57.6 seen in October. The rise was a result of a better reading for current conditions and lower inflation, while future expectations declined.
USD/JPY - Stocks Fall in US, Weakening Dollar vs Yen
After a strong rally yesterday, stocks returned to its defensive pose, falling on the wave of negative news concerning consumers. The Dow Jones index was down 250 points at noontime. The loss of risk appetite brought the Dollar-Yen pair to the 96.10 level, halving yesterday’s rise. However, the Dollar managed to stop the bleeding at that point and was trading around the 97 level in the afternoon.
CAN Manufacturing Shipments Surprise Forecasts on Upside
Manufacturing shipments defied expectations of a 1.7% decline, and expanded 0.1% in sales. The results were mixed across the different sectors, with 13 of the 21 industries reporting gains. Economists had expected the decline in August to continue as the US economy slows and demand weakens. This is somewhat reflected in the 3.6% decline in new orders, after declining 1.7% in August, and a 0.3% decline in unfilled orders, after a 2.8% gain in August. In a separate report, sales of new motor vehicles rose 2.5%.
USD/CAD - Loonie Pressured by Weak Global Growth Prospects
With evidence mounting towards a deeper global slowdown, with several main economies already in the throes of recessions, the Canadian Dollar fell again to the US Dollar after rising yesterday. Speculation that a slowdown will limit demand for commodities such as oil pressured the Euro. The greenback rose above 1.23, and was trading near 1.2250 in afternoon NY trading.
Next Week’s Releases
Some key releases to keep an eye on to start next week include GDP and services activity data from Japan, Retail Sales from Australia, and housing prices from the UK
Capital Market Services, L.L.C.
www.cmsfx.com
©C2004-2005 Globicus International, Inc. and Capital Market Services, L.L.C. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, L.L.C. with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, L.L.C. accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Capital Market Services, L.L.C.
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