EUR:
Yesterday Germany contracted by 0.2 percent this quarter, undercutting
Bundesbank forecasts that gross domestic product would be unchanged.  The
contraction is mainly due to a disappointing performance on foreign trade and
investment. German Minister for Economic affairs  Sigmar Gabriel blamed
the country’s slowdown on threats from eastern Europe and the Middle East, and
a weaker euro zone.

With these headwinds still fairly prominent we could see more poor economic

EUR:
Yesterday Germany contracted by 0.2 percent this quarter, undercutting
Bundesbank forecasts that gross domestic product would be unchanged.  The
contraction is mainly due to a disappointing performance on foreign trade and
investment. German Minister for Economic affairs  Sigmar Gabriel blamed
the country’s slowdown on threats from eastern Europe and the Middle East, and
a weaker euro zone.

With these headwinds still fairly prominent we could see more poor economic
results from Germany. 

The French economy did not do much better, GDP failed to grow for the second
quarter in a row. It then forced the French government to announce publicly
that it would miss its budget deficit target this year and cutting its 2014
forecast for 1 percent growth to just 0.5%

In another blow to the Euro currency annual inflation rate dropped to 0.4
percent in July, from 0.5 percent in June. This is well below the Eurozones
target figure of 2% and pushes the Euro closer to deflation.

Prices rose in restaurants and cafes, rents, and maintenance of vehicles, while
the price of fruit, vegetables and telecommunications all fell.

The Euro is now stuck in a difficult cycle of low economic growth, low
inflation high public debt and shrinking tax revenues. Mario Draghi may be
forced to make implement further monetary policies such as quantitative easing
to try to pull Europe out of this increasingly difficult situation. 

USD:
In the US jobless claims climbed by 21,000 to 311,000 in the period ended Aug.
9, the highest in six weeks. Applications for unemployment benefits in the U.S.
rose more than forecast last week, interrupting a steady decline in claims. A
significant decline in layoffs has been the major driver of an improving job
market. This is a good sign that business owners have a more optimistic outlook
and are more willing to retain their staff. 

Fed Chair Janet Yellen has argued that there is still slack in the labour
market, citing poor wage growth and a large number of long-term unemployed
Americans and those working part-time. This is now the main factor for her
remaining reluctant to raise interest rates in the US. 

Key Announcements:

09:30 BST – GBP UK GDP (Q2) expected to be unchanged at 0.8%

13:30 BST- USD US Producer price index (July) expected to be lower at 1.8%

14:15 BST- USD- US industrial production (July) expected to be higher at 0.3 %

14:55 BST – USD – US Consumer sentiment (Aug) expected to be higher at
82.2

Our dealers are available via e-mail ([email protected]) or by phone (020 7220 8181).