Sunday, June 19, 2011

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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University of Michigan (UoM) Report Underlines Growing Pessimism

Posted: 17 Jun 2011 12:51 PM PDT

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The University of Michigan's (UoM) preliminary consumer sentiment report, published this afternoon, underlined recent talk of growing pessimism in the American economy by domestic consumers. The report, which is a survey of about 500 consumers, asks respondents to rate the level of present and future economic conditions in the US.

With expectations for a mild decline, the sudden drop of almost 3 points in the survey highlights the analysis of recent weeks. A soft start to the 2012 presidential election campaign began this week with the first major Republican debate that focused on criticism of Obama's economic policies. The sudden focus on the economy by this gradual, but momentum-building campaign season was also fraught with the distraction of Rep. Anthony Wiener's (D-NY) resignation Thursday.

An intense week of critical views and heightened awareness by US citizens about the state of their nation has generated a modicum of frugality and consumer pessimism, now reflected in the UoM preliminary report. With the summer expected to be sluggish, as global manufacturing plummets, this pessimism may not let up anytime soon.

CB Leading Index Forecasts Better Growth in US

Posted: 17 Jun 2011 12:48 PM PDT

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The typically-muted impact report by the Conference Board (CB) today revealed what many have considered a surprise revelation about future economic direction. The monthly Leading Index report revealed a sudden uptick by 0.8% this month, well above forecasts for a 0.3% growth in several economic sectors.

The report is a combination of 10 economic indicators out of the US economy. It tends to have little effect, however, as the data which comprises the index is released earlier in the month. It is designed to forecast the direction of the US economy which makes this sudden jump contrary to much of the analyses which are expecting a sluggish second quarter. Should traders anticipate growth, as referenced by the CB?

United France and Germany Tackle Greece Debt Concerns

Posted: 17 Jun 2011 12:46 PM PDT

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Unity between leaders in France and Germany was seen today as both French President Nicholas Sarkozy and German Chancellor Angela Merkel made statements about a new plan, dubbed the "Vienna Initiative," that may lead to approval for an aid package to Greece. The EUR was seen trading moderately stronger following the news as it has taken pressure off investors who were concerned about an impending default.

Many analysts claim that the initiative wasn't a new one and many were in fact expecting such an 11th-hour agreement to be struck. The rise in regional risk appetite and the positive impact on European shares and bond spreads has so far provided a glimpse of hope for an economic turnaround following the expected sluggish second quarter.

Euro Zone Trade Deficit Widens

Posted: 17 Jun 2011 12:44 PM PDT

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Back to back publications of trade balance figures from Italy and the broader euro zone today highlighted a downturn in regional exports, likely connected with the upsurge in EUR values and downturns in demand for manufactured goods. The added buying power of the EUR, moreover, has helped hike import levels and the result has been a widening trade deficit this past month.

The data comes as little surprise as many investors expected the region's deficits to worsen. Growing strength of the EUR, as previously mentioned, coupled with sluggish manufacturing and industrial output no doubt will generate widening trade deficits in most of the developed world this summer. The EUR was seen trading mildly bearish as a result of the news, however, as investors anticipate an economic slowdown in the region.
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