European Market Update

Daily Forex Fundamentals | Written by Trade The News | Aug 24 09 10:00 GMT |

Chinese, Russian officials remain cautious on achievable sustainable economic growth ECONOMIC DATA (AS) Austrian Jun Industrial Production M/M: 0.6% v -1.5% prior, Y/Y: -11.4% v -13.5% prior (DE) Danish Aug Consumer Confidence Indicator: -2.6 v -1.0e (TT) Taiwan Jul Unemployment Rate: 6.0% v 6.0%e (TT) Taiwan Jul Export Orders Y/Y: -8.8% v -9.8%e (TT) Taiwan Jul Industrial Production Y/Y: -8.1 v -10.0%e (EU) Euro-zone Jun Industrial New Orders M/M: 3.1% v 1.8%e ; Y/Y: -25.1% v -28.3%e (IC) Iceland July Wage Index M/M: 0.45 v 0.2% prior; Y/Y: 2.6% v 3.0% prior SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM In equities news overnight: Rising risk appetite continued into the European open on Monday. The latest catalysts were Friday's much stronger than expected U.S. existing home sales data and optimistic comments from policymakers at the Jackson Hole symposium. European equities opened in the positive but saw their best levels erode on continued cautious comments from the Chinese Premier Wen that various road bumps remain on the path for a sustainable economic recovery. European bourses up around 0.7% as the NY morning approached. In specific stocks; Lundbeck [LUN.DC] FDA granted marketing approval for Sabril in treatment of epilepsy || BBVA [BBVA.SP] Acquired the Banking Operations of Guaranty Bank based in Austin, Texas from the Federal Deposit Insurance Corporation (FDIC), effective immediately. || Sulzer [SUN.SZ] Reported H1 Net profit of CHF156M above the estimates of CHF125M. Revenues were CHF1.7B in line with the CHF1.6B estimates. || Yule Catto [YULC.UK] Reported H1 Pretax £19.9M above £18M estimates. Revenues were £262M compared to expectations of £276M. the company did note it expected FY results to be slightly ahead of its previous view. || Novartis [NOVN.SZ] Received approval in EU for Xolair to treat children aged 6 to 11 suffering from severe persistent allergic asthma || TeliaSonera [TLSN.SW] Announced two Baltic acquisitions. It made cash offer for Estonia's EESTI Telekom for EEK93/shr in a deal valued at EEK5.12B; And cash offer for Lithuania's TEO LT for LTL1.83/shr in a deal valued at LTL527M (combined acquisition valued at SEK4.89B) Speakers: China's PM Wen reiterated his cautious views. He stressed that China would continue with proactive fiscal policy and moderately loose monetary policy. Wen reiterated the view that economic recovery was not yet on solid footing can not be blindly optimistic || Japanese Vice Fin Min Tango stated that Japan needed to restrain bond sales as much as possible. The official declined to comments on Hatoyama bond sale remarks. During the Asian session today, Japanese press noted that DPJ leader Hatoyama commented that if his party wins the upcoming general election next week it would not raise government bond issuance in the next fiscal year || Russian Econ Ministry stated that the country's July GDP was up 0.5% compared to June. On an annual basis the GDP figure was -9.3% versus -10.1% prior reading in June. The economy showed signs of improvement but the crisis was not over yet. The ministry forecasted Aug inflation expected between 0.3% to 0.4% and added that the rate could decline further in Sept || (FR) French Min stated that the Gov't has spent 65% of €26B stimulus package. The official noted that its economy begging to pick up In Currencies: The USD was modestly firmer against the major pairs as the week began. The GBP was softer on UK revenue concerns following the public spending data released last week. The USD and JPY slowly grinded for gains against the major pairs aided by continued cautious comments from Chinese officials. Russia Econ ministry also hinted toward being overly optimistic on the improved global environment. EUR/USD hoving around the 1.43 mark through out the session with little momentum to follow through its price action at this time. USD/CHF holding above the 1.0570 level. In Fixed Income: A quiet start to the week in Europe, with government bond prices drifting modestly lower as the equity rally continues. Yields are for the most part steady in cash markets with the 10y Note hovering around 3.55%, the 10y Gilt at 3.64% and the Bund at 3.325%. As the Treasury gears up to sell $119B in 2,5 and 7 year Notes this week, European markets easily absorbed some supply, albeit on a considerably smaller scale. Norway's NOK4B 2017 auction was covered almost 3 times, whilst Slovakia sold €461M in 2013 bonds with a bid-to-cover of 1.7, comfortably above prior results. Three month Euribor improved by 1 bps to fix at 0.84% In Energy: Nigerian rebel group MEND said it has suspended peace talks because it said the Nigerian government expected disarmament without real issues being addressed || Iraqi Oil Min commented that it did not see the need for OPEC to increase crude output at next meeting in Sept. ||Petrofac [PFC.UK] Reported H1 Net profit of $145.6M better than the $140M estimate. Revenues were $1.6B just below the consensus view of $1.7B. || Gamesa [GAM.SP] Awarded $160M wind turbine order from Canada's Western Wind Energy [WND.CA]. Contract is for the procurement of up to 120 MW of wind turbine generators. || Soco [SIA.UK] Announced spudding of first well on Marine XI off Congo || In the papers: FT had an article noting that Germany could face a wave of corporate restructurings and potential mass job-cuts following next month's federal elections. Article noted that according to Germany's top managers, companies have deferred job cuts to ensure re-election of a business-friendly gov't and there has been an implicit 'pact' ahead of the Sept 27th ballot || Nouriel Roubini, the New York University professor stated that the chance of a double-dip recession was increasing because of risks related to ending global monetary and fiscal stimulus || French banks to propose tougher rules on bonuses according to Les Echos. Article noted that the proposals will include increasing the delay between generating a profit and paying a bonus, and fixing the amount of variable compensation that can be delayed at 66% NOTES China's PM Wen maintains a cautious tone on achieving a sustainable recovery. Looking Ahead 8:00 (HU) Hungarian Central Bank Base Rate Decision: Consensus expectations for a 50bps cut to 8.00% 8:30 (US) Jul Chicago Fed Nat Activity Index: No expectations v -1.8 prior 8:30 (CA) Canadian Jun Retail Sales M/M: 0.2%e v 1.2% prior, Less Autos M/M: 0.4% e v 0.7% prior 10:00 (UK) BoE 2019 - 2032 reverse Gilt auction 10:30 (IS) Israeli Central Bank Base Rate Decision: No change expected from the current rate is 0.50% 11:00 (US) Fed 2011 - 2012 coupon pass 12:00 (CA) Canada to sell 5y Notes 15:30 (MX) Mexico July Preliminary Trade balance: -558M expectedv -209M prior Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. 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