Forex News | Currency News by Forexlive

• He is still an inflation hawk, but U.S. needs to have a plan for deflation
• If U.S were to keep rates at zero for 10 years, its economy would become like Japan’s
• Fed should use QE policy to adjust to events
• Everyone is on board with view that if things get worse, Fed would need to do more
• “At the end of thne beginning” of Europe debt crisis, must now see if countries follow through on commitments

http://www.businessinsider.com/goldmans-leading-indicator-plummets-to-a-seven-month-low-predicts-an-ism-collapse-2010-7?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+clusterstock+(ClusterStock)

And EUR/USD claws it’s way back over 1.3000.

BRUSSELS (MNI) – Global growth could have peaked in the second
quarter of this year, as the exit from stimulus measures, policy
tightening in some countries and the peaking of the inventory cycle
combine to cause a drag in the second half, the Irish central bank said
on Friday.

“Recent data suggest that the global growth rate may have peaked in
the second quarter and that the expansion will occur at a slower pace in
the second half of the year,” the Irish central bank said in its
quarterly bulletin.

“This is likely to reflect a number of factors including deliberate
policy tightening in some emerging economies, the peaking of the
inventory cycle and the weaker impact of stimulus policies on growth
rates,” it added.

The export-dependent Irish economy – which is emerging from a deep
recession – relies on the strength of the global recovery for its
growth.

But the central bank noted that international economic developments
had been mixed and that “there are ongoing concerns about the strength
of the recovery in some countries.”

The fact that the early economic recovery had exceeded
policymakers’ hopes, was partly due to “the exceptional support from
monetary and fiscal policies,” the central bank said.

It has “become clear,” the central bank said, that “some of these
same policies are generating potentially damaging side-effects, in
particular, the emergence of high and unsustainable fiscal deficits.”

Across Europe policymakers are trying to combine the withdrawal of
economic stimulus measures and reducing debt without hampering the
fragile economic recovery.

The bank said that this withdrawal, “when combined with the
fragilities that remain in the financial sector” could “slow or, in a
worst-case scenario, even derail the international recovery.”

Eurozone growth will be hit by the negative short term impact of
debt reduction, the Irish central bank said, but “the long run benefits
of such measures are expected to outweigh these short run costs.”

The European Central Bank’s staff project that Eurozone GDP will
grow by between 0.7% and 1.3% this year and by between 0.2% and 2.2% in
2011.

Eurozone inflation excluding energy “is expected to remain subdued
given the significant amount of spare capacity in the economy and the
expectation of a gradual economic recovery,” the bulletin said.

“Consumer inflation expectations, as measured by the European
Commission survey, support this view of subdued domestic price
pressures,” it added.

Tax rises as governments try to control their deficits represent an
upside risk to the inflation outlook, while weaker-than-expected growth
is a downside risk, the bulletin said.

The central bank said it expects Irish gross domestic product to
rise 0.8% this year and 2.8% next year, after contracting 7.6% in 2009
and 3.5 in 2008.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]

EUR/USD up at 1.2995 from session low 1.2980 with ACB buyer seen around lows.  Didn’t get name but could well have been Bank of Korea, who is said to have intervened to buy dollars versus it’s home currency overnight. Reserve rebalancing basically.

Elsewhere decent aforementioned buy interest around 86.20 in USD/JPY seems to be just about holding the line so far. We’re presently at 86.30.

No bounce in European stocks as yet, firmly planted around session lows which won’t be helping EUR/USD or USD/JPY.

Cable back down through 1.5600, presently at 1.5587.  Talk of stops through 1.5580.

Unchanged from downwardly revised 2.23 in June (previously 2.25)  Worse than expected, the median forecast calling for a 2.30 read.

EUR/USD having gotten back up to around 1.3050 has come under renewed pressure once more, presently back down at 1.3025.  This latest set-back seems to be related to stops being tripped in the EUR/JPY cross through 112.50.  The cross is presently down at 112.30.

European stocks extending slide as general risk aversion picks up a little.

As aforementioned more stops through 1.3020 before buy orders at 1.3000.

Unchanged from May and as expected.

Euro zone July inflation estimated at 1.7% y/y, up from 1.4% in June and as expected.

June: 10.0%

MNI survey median: 10.0%
MNI survey range: 10.0-10.1%

Previous: 10.0% May, 10.0% Apr, 10.0% Mar, 9.9% Feb, 9.9% Jan

FRANKFURT (MNI) – The Eurozone seasonally adjusted unemployment
rate was stable again in June as expected at 10.0%, unchanged since
March, Eurostat reported Friday.

Still, some 6,000 more people lost their jobs in June after a rise
of 41,000 May and a dip of 8,000 in April. This left the total at 15.771
million, for a rise of 788,000 on the year.

The unemployment rate for men was also stable on the month at 9.8%
and 0.5 point higher than a year earlier; the rate for women rose 0.1
point to 10.2%, half a point higher than in June 2009 as well.

Youth unemployment (i.e. those under 25), a pressing social problem
in most countries, stood at 19.6% in June, down 0.2 point from May, but
up 0.1 point on the year. Rates varied widely from a low of 8.1% in the
Netherlands to a whopping 40.3% in Spain.

After trending upwards for much of the last two years, unemployment
in the Eurozone is beginning to stabilize, albeit at uncomfortably high
levels for policy-makers.

Differences across countries remain pronounced. Eurostat’s
estimates showed unemployment in Germany stable at 7.0% in June, while
France saw a 0.1-point rise to 10.0%. Italian unemployment eased 0.1
point to 8.5%.

Unemployment in Spain rose 0.2 point to 20.0%, the highest level
the country has ever seen since Eurostat started keeping data in 1986, a
Eurostat official confirmed. (Official government figures, which are
calculated differently than Eurostat’s, showed Spanish unemployment at
20% already in March).

Among smaller countries, Austria (3.9%) and the Netherlands (4.4%)
had the lowest unemployment rates in June, while Slovakia (15.0%) and
Ireland (13.3%) were at the higher end.

Sentiment indicators suggest that prospects on the jobs front are
improving. July’s flash PMI polls pointed to more hiring in both
manufacturing (50.9) and the services (51.7).

According to the European Commission’s survey in July,
manufacturers’ hiring intentions rose for the 10th straight month. For
retailers, hiring expectations increased for the second straight month,
reaching the index’s long-term average. Households’ concerns about
unemployment over the next twelve months dropped for the fifth straight
month.

In Germany, the labor market continues to improve. National data
showed that the total number of employed persons rose for the fifth
straight month in June. Unemployment continued lower in July, down
20,000 to 3.21 million in seasonally-adjusted terms.

Given Germany’s surprisingly robust economic rebound, this trend is
likely to continue, experts reckon. The Ifo Institute said last week
that manufacturers expect to make “slight” increases in staff levels in
the coming months.

National data from France showed a surprising drop in registered
jobseekers of 8,600 in June. While the data indicated that improved
hiring prospects are encouraging some current job holders to look for
other positions, they do not reflect increased hiring. Rather, data show
a decline in layoffs and new labor market entries as well as fewer
expirations of short-term contracts or training programs.

In Spain, however, prospects are still grim as the end of the
construction-fueled boom has brought a rapid rise in unemployment. The
necessity of Spain’s government to cut its ballooning deficit means that
the state is not in a position to help put people back in employment
through publicly supported jobs.

Spain’s government said last week that 231 public works projects
will be suspended as part of the budget consolidation process, for a
total cutback E9.6 billion.

–Frankfurt bureau; +49-69-720142; tbuell@marketnews.com

[TOPICS: M$X$$$,M$XDS$,MT$$$$]

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