“Market uncertainty continues”
Over the last week we have witnessed more snippets of economic good news being clouded by renewed weak data and economic uncertainty.
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Firstly let’s take a look at the positives: we saw a bullish outlook expressed by the deputy governor of the IMF who stated that they were looking for an up-turn in economic fortunes by the beginning of next year. This is notable as the IMF has generally painted very bleak forecasts in the recent past.
In the UK, the Rightmove survey indicated a rise in asking prices of 2.4% in May after the 1.7% increase in April are we seeing a bottom in the housing market? You would be a brave person to put your house on it- looking at the report in more detail the rise was attributed to lower volumes and limited supply preventing further price falls.
On the weaker side of recent data we turn our attention firstly to the eurozone…following Fridays sharper than expected contraction in GDP the media over the weekend focused on the cracks appearing on the outlook for the eurozone.
In the Times this morning, Kaletsky sets out why more and more people are becoming concerned over the methods being implemented by both the ECB and the German government to try and drag the Eurozone out of the current slough that has spread from Eastern Europe into the central region and now into the western countries.
Recent statistics released by the European Commission revealed the worst economic numbers ‘produced by any official institution in the capitalist world since 1945′. The Euro has continued to lose ground against the major currencies in early trading.
For the week ahead the major data to look out for will be the ZEW which will give a reflection of economic sentiment. On Wednesday we have the Bank Of England minutes which will focus on the extra £50 billion in the QE programme. On Friday we have the Bank Of Japans interest rate decision- recently the Yen has lost ground with an increase in swine flu cases underming its safe haven status.
Report by Phil McHugh, Corporate Foreign Exchange
The contents of this report are for information purposes only.
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