Eurozone seen declining

The Eurozone output is seen declining in the second quarter as the debt crisis hurts confidence, making businesses reluctant to invest and consumers worried about their costs and spending. The Gross domestic product (GDP) in the Eurozone is expected to shrink by 0.2% from the first quarter of the year.

However, Germany which is the Eurozone's largest economy is expected to grow. Germany has benefited from growing exports to Asia and falling unemployment, providing a good export market.

Meanwhile the OECD has downgraded global growth forecasts. It now expects that even the emerging economies will lose momentum. China’s growth is expected to fall from double figures during the recession to 7.6% this year and India’s GDP has also retracted back to levels seen in mid recession. 

UK Retail sales increased MoM and YoY albeit marginally. Inflation also rallied to 2.6% giving the Bank of England less room to manoeuvre. Even though BoE governor King is pessimistic about the UK economy he may not have sufficient tools to relax monetary policy.  

Today's Fundamentals

06:00 Germany: Gross Domestic Product s.a (QoQ) (Q2) - Consensus predicts a decrease at 0.2% from previous figure of 0.5% which should be negative or bearish for the EUR.

06:00 Germany: Gross Domestic Product n.s.a (YoY) (Q2) - Expected at 1.7% from a previous figure of 1.0% which should be negative or bearish for the EUR.

07:00 Germany: Gross Domestic Product w.d.a (YoY) (Q2- Consensus predicts a slight decrease at 1.2% from a previous figure of 1.1% which should be negative or bearish for the EUR.

08:30 United Kingdom: GBP Core Consumer Price Index (YoY) (Jul - Expected at 2.1% which will bring stability for the GBP.

08:30 United Kingdom: GBP Consumer Price Index (YoY) (Jul) - Consensus predicts a decrease to 2.3% from a previous figure of 2.4% which should be negative or bearish for the GBP.

09:00 European Monetary Union: Gross Domestic Product s.a. (QoQ) (Q2) – Expected to remain the same at 0.9% which should bring stability to the EUR.

09:00 European Monetary Union:  Gross Domestic Product s.a. (YoY) (Q2) - Consensus predicts the figure to remain the same at 3.3% which should bring stability for the EUR.

09:00 Germany: ZEW Survey - Economic Sentiment (Aug) – Expected to remain the same at -19.6 which should bring stability for the EUR.

12:30 USD: Retail Sales (MoM) (Jul) - Consensus predicts an increase at 0.3% from a previous figure of -0.5% which should be positive or bullish for the USD.

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