Quiet day in the markets as tensions ease in Ukraine
12/Aug/2014 • Currency Updates•
Yesterday was pretty quiet with only a handful of reports released for Europe and the United States. The most significant events were the reduced tensions in Ukraine, and the comments of Fed official, Stanley Fisher, who is pushing for more expansionary policy to boost the U.S. recovery. Both pieces news boosted equity markets. Nevertheless, the EUR pulled back slightly as the OECD said that the economic growth in Germany was likely to remain weak over coming months.
The only release of note on Monday was the CB Leading Economic Index, which measures future trends of the overall economic activity, the index increased by 0.6%. This news, although not very significant, is a sign that the recovery in the UK is on track in comparison to the majority of European countries. The GBP rose by more than 0.2% versus the EUR and remained flattish versus the USD.
European stocks were on the upswing on Monday, as Russia indicated it will work to ease tensions with Ukraine. However, the EUR was off slightly as the economic growth is likely to remain weak in Germany over coming months, according to leading indicators released by the Organization for Economic Cooperation and Development. The OECD said its leading indicators for France and Italy continue to point to stronger growth, as they have done for a number of months. However, those pickups have yet to materialise, leaving Spain as the only major Eurozone economy to enjoy a significant acceleration over recent quarters. The EUR declined slightly versus both, the USD and GBP.
U.S. equity markets gained as Larry Summers, former U.S. Treasury Secretary, and Stanley Fischer, Federal Reserve Vice Chairman, both agreed that monetary policy may still be needed to support the American recovery. Fischer said rebounds across advanced economies have been disappointing, leading many observers, including the Fed, to reduce their long-term expectations for growth potential in the U.S. No macroeconomic news came out over the Atlantic. The USD remained flattish versus both, the GBP and the EUR.
Today, there is a G20 meeting which might bring a new dimension to the markets. Listen carefully to what they say about the recovery in the U.S. and in Europe. Confidence surveys of Germany and of the Eurozone will be released at 09.00 and could definitely move FX markets the expectations of which are 18.2 and 41.3 respectively. The U.S Redbook will be released at 12.55 and noteworthy is the monthly budget statement for the U.S that will be released at 18.00. The consensus is a deficit of $98 billion. Just before midnight GDP results will be released for Japan which will definitely affect the markets in Asia.