Fundamental Headlines
• London, New York Stand to Suffer – Wall Street Journal
• Crude Slips on Credit Crisis Fears – Wall Street Journal
• Asian central banks inject markets with cash – Financial Times
• AIG Credit Rating Cut Threatens Quest for Funds, Roils Markets – Bloomberg
• Wall Street Upheaval May Sap Economy, Spurs Rate-Cut Pressure – Bloomberg
• EURUSD - German investor expectations improved for the second consecutive month, jumping to -41.1 from -55.5 in August. Falling oil prices paired with a weakened euro has helped to boost growth prospects for Europe’s largest economy as trade conditions are anticipated to improve over the second half of the year. Meanwhile, the headline reading for inflation in the Euro-Zone held steady at 3.8% in August, while the core measure ticked higher to 1.9% from 1.7%. For more news and resources, visit our EUR/USD Forum.
• GBPUSD – The headline reading for consumer price inflation in the U.K. surged to a fresh record high of 4.7% from 4.4% in July as food prices rose at a record pace of 14.5%. Furthermore, the core measure of inflation inched higher to 2.0% from 1.9%, which suggests that upward prices pressures could strengthen over the coming months. On a lighter note, the retail price index unexpected slipped to 4.8% from 5.0%, failing to meet expectations of a 5.0% increase. Meanwhile, U.K. house prices declined 0.3% from last year, and may fall further as foreclosures are on the rise. For more news and resources, visit our GBP/USD Forum.
• AUDUSD – After lowering the benchmark interest for the first time in seven years, RBA policy members stated that ‘demand could weaken more sharply than necessary,’ the minutes for the September 2nd meeting showed. The central bank has taken a preemptive approach in supporting economic growth for the $1 trillion economy as they noted that ‘a necessary precondition for a decline in inflation back towards the target was therefore in place, even though evidence for that decline would not be seen in the figures for some time.’ The central bank highlighted that the economic implications of holding higher borrowing costs ‘would deliver a faster reduction in inflation, but at greater short-term economic costs.’ The RBA has clearly pushed inflationary concerns to the backburner as economic growth continues to deteriorate, which suggests that the central bank may lower the benchmark interest rate further over the coming months. For more news and resources, visit our Australian Dollar Currency Room.
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