German Industrial Production Improved Significantly In May

Daily Forex Fundamentals | Written by ecPulse.com | Jul 08 09 13:45 GMT |

The final reading is out, the sixteen nations GDP contracted in first quarter 2.5% on the quarter and 4.9% on the year, as its considered the deepest contraction since the records started in 1995. The endless turbulence in the markets that managed to diffuse into the economies was the main reason behind this endless downturn. Banks, abstained from lending money to non-financial institutions, as they still hold on their hesitation along with trying to adjust according to the newly issued rules and regulations. It might be the bottom; studying the data released since the beginning of the second quarter markets started to believe that the contraction seen in the first quarter is the bottom to the current dilemma. Economies in the sixteen nations are finally getting some grip to head toward an expansion once again; nevertheless, this does not mean that growth will be seen this year, where it’s currently postponed to second half of 2010. However, in the middle of this pessimism we have seen better than expected fundamentals, the German Industrial Production rose in May 3.7% on the month from the revised previous -2.6%; the yearly production improved to -17.9% from revised previous -22.3%. This improvement in the Europe’s leading economy won’t prevent a deep contraction this year, where we already seen a wide contraction in the GDP reading along with further confirmations are needed. The German finance minister had already approved huge stimulus packages to bolster the economy, alongside with the rate reduction, which have been taking place by the European Central Bank since the dilemma began. Rates in the euro area reached down to 1.0% from the highest in July 2008 settling at 4.255 levels. The contraction in the second quarter of this year would be narrower than the one seen in the first three months of the year, as those predictions were built upon the previously released fundamentals along with Trichet comments that narrower contraction will be taking place. Nevertheless, what we are really looking for at time is when an expansion will take place, as according to our predictions the GDP will expand in the upcoming year. The released fundamentals from the euro area could not boost European indices falling for the fourth consecutive month, where Dow Jones euro stoxx 50 lost 0.75% or 17.32 points reaching 2303.58 levels; CAC 40 lost 0.78% reaching 3024.74 levels and finally the German DAX lost 0.04% or 1.67 points reaching 4596.54 levels. Pessimism will remain to linger financial markets, as markets recently had inclined boosted heavily by the ongoing optimism that took place recently, especially when markets started to foresee an improvement and bottoming out to the recession. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk