German Manufacturing, Foreign Sales Signal Recession; Freddie Mac Posts 2Q Loss

Daily Forex Fundamentals | Written by DailyFX | Aug 06 08 11:33 GMT |



Fundamental Headlines

GBPUSD - U.K. consumer confidence posted its largest decline in four years, dropping 11 points to 51. Confidence continues to decline amid the housing slump, unemployment on the rise, higher living costs, and inflated prices. The British economy continued to expand last quarter, showing 0.1 percent growth, its slowest growth in three years. Despite talks of a recession, inflationary pressures all but guarantee the Bank of England will leave its rates at 5.00 percent, for the fourth consecutive month.

EURUSD - German factory orders fell for the seventh month in June, creating speculation that the economy contracted in the second quarter. Manufacturing faltered 2.9 percent in May, amid high food and energy costs pushing up the cost of production. Orders are down 6.1 percent from a year earlier. As a result, inflated prices are draining consumer purchasing power and a highly appreciated euro is weighing on exports, with foreign sales dropping 5.1 percent.

USDJPY - The coincident index, a measure of production and job applicants, fell to 101.7 in June from 103.3 in May. The leading index, a signal for the direction of the economy, fell to 91.2 in June from 92.9 from the previous month, showing the economy is showing downside growth potential. As growth slows and prices continue to rise, the Japanese government has acknowledged that stagflation is beginning to set in, ending Japan’s post war expansion. However, economists believe the slowdown will moderate as companies have dismissed additional workers and exports are boosted to emerging markets, removing the risk of recession.



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