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FX Update: European Outlook

Posted:25/11/2008 8:04 by Peter Burnside
The USD saw a moderate recovery after weakening on Monday, though stock markets in Asia continued to rejoice in the Citigroup bailout development. There is a busy calendar in both Europe and North America ahead on Tuesday, and market participants will be wary given that the plethora of data due is likely to reaffirm a recessionary picture. German Q3 GDP data is expected to confirm the -0.5% q/q (median same) contraction reported with the preliminary number. The eurozone also has French November business confidence and Italian consumer confidence. In the UK, BBA consumer credit data and Q3 business investment data will be released, while BOE's King, Gieve, Bean, Barker and Sentance testify in front of the Treasury Committee on the November Inflation Report. In the US, we expect Q3 GDP will be bumped down to a -0.6% rate of growth (median -0.5%), from -0.3% previously. Also due is the S&P Case/Shiller home price index, consumer confidence, weekly chain store sales and another large 5-year note auction. Canada has retail sales. Overall, plenty of data, most of which carry downside risk. Despite the recent consolidation in FX, safe haven strategies remain favoured. click here to return to the top of the page
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