Dollar rally continues
Data released yesterday showed the Eurozone was moving closer to a recession after the economy contracted for the first time since the Euros launch almost a decade ago.
Gross domestic product fell 0.2% in the second quarter of 2008 after increasing 0.7% in the first. The year on year growth rate slowed for a third straight quarter to 1.5%. Technically a recession is when an economy shrinks for two consecutive quarters.
After European Central Bank President Jean- Claude Trichet last week said growth will be "particularly weak" through the third quarter, many economists now believe the Euro is on the verge of a recession.
Euro inflation data was also released yesterday at 4%; less than the 4.1% estimated earlier but still twice the ECB's 2% target. Food price increases accelerated to 6.7% in July, while energy-price inflation soared to 17.1%.
The central bank last month raised its target rate to 4.25%, a seven-year high, to curb high inflation levels. Even with the weaker growth levels announced, financial markets are only pricing in a slim chance of a reversal of the recent rate hike.
U.S. consumer prices jumped to a 17 year high in July, reducing the scope of the Federal Reserve to lower interest rates as economic growth slows. The index rose 0.82% month on month in July, ahead of market forecasts of a 0.4% monthly increase.
The annual rate of consumer price inflation is now 5.6% year on year, up from 5.0% in June and significantly higher than the market expectation for a rise to 5.1%.
The recent dramatic retreat in energy prices and an increasingly sluggish global economy are likely to put downward pressure on headline inflation rates in coming months. The markets therefore concentrated on the weak Euro growth story taking the Euro to its lowest level in six months against the USD, below $1.48.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Gross domestic product fell 0.2% in the second quarter of 2008 after increasing 0.7% in the first. The year on year growth rate slowed for a third straight quarter to 1.5%. Technically a recession is when an economy shrinks for two consecutive quarters.
After European Central Bank President Jean- Claude Trichet last week said growth will be "particularly weak" through the third quarter, many economists now believe the Euro is on the verge of a recession.
Euro inflation data was also released yesterday at 4%; less than the 4.1% estimated earlier but still twice the ECB's 2% target. Food price increases accelerated to 6.7% in July, while energy-price inflation soared to 17.1%.
The central bank last month raised its target rate to 4.25%, a seven-year high, to curb high inflation levels. Even with the weaker growth levels announced, financial markets are only pricing in a slim chance of a reversal of the recent rate hike.
U.S. consumer prices jumped to a 17 year high in July, reducing the scope of the Federal Reserve to lower interest rates as economic growth slows. The index rose 0.82% month on month in July, ahead of market forecasts of a 0.4% monthly increase.
The annual rate of consumer price inflation is now 5.6% year on year, up from 5.0% in June and significantly higher than the market expectation for a rise to 5.1%.
The recent dramatic retreat in energy prices and an increasingly sluggish global economy are likely to put downward pressure on headline inflation rates in coming months. The markets therefore concentrated on the weak Euro growth story taking the Euro to its lowest level in six months against the USD, below $1.48.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: ec, ECB, eurozone, slowing economies
posted by Drs Search @ 6:29 PM
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