U.K. GDP Improves, Helping to Ease Recessionary Fears
• Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis – Wall Street Journal
• Industry Is Remade in a Wave of Mergers – Wall Street Journal
• Dexia receives €6.4bn capital injection – Financial Times
• Citigroup Gains Scale, Confidence From Regulators – Bloomberg
• Banks Deposit Record 44 Billion Euros With ECB – Bloomberg
• GBPUSD – The final GDP reading for the U.K. was revised higher to 1.5% from a preliminary reading of 1.4%, which suggests that the economy may avoid a recession in the third quarter. Meanwhile, the current account deficit widened to -11.0B from a revised reading of -5.5B in the first quarter, signaling that capital outflows have increased as growth prospects weaken. Falling home prices paired with tightening credit conditions have clearly taken a toll on Europe’s second largest economy, and conditions have gotten worse as Brandford & Bingley were nationalized by the U.K. government over the weekend. Discuss the topic and your trade ideas in the GBP/USD Forum.
• EURUSD – The German jobless rate slipped to -29K from a revised reading of -39K in August, which helped to keep the unemployment rate held steady at its lowest level in 16 years. The unemployment rate was unchanged at 7.6% for the second consecutive month, which suggests that Europe’s largest economy may avoid a recession in the third quarter. Furthermore, the ILO unemployment rate declined to 7.2% from 7.3%, which suggests that increased labor demands may help to support economic activity going forward. Furthermore, the Euro-Zone CPI estimate dipped to 3.6% from 3.8% in August, which suggests that upside inflation risks may weaken over the rest of the year. Discuss the topic and your trade ideas in the EUR/USD Forum.
• USDCHF – The UBS consumption indicator fell to 1.62 from a revised reading of 1.86 in July, which suggests that economic activity may weaken further as higher inflation continues to sap purchasing power for consumers. The growth outlook for Switzerland has clearly weakened throughout the second half of the year, and market participants have already raised bets that the economy will slip into a recession by 2009 as Germany, the largest economy in Europe, is on the brink of a recession. For more news and resources, visit the new Swiss franc Currency Room.