Japan’s economy contracted less than forecast in Q2 as reconstruction work limits the slump from the record earthquake and tsunami. GDP shrank at an annualized 1.3%, marking three consecutive quarters of declines. Also, consumer spending fell 0.1% in Q2, compared with a 0.6% drop in the first quarter, reports showed. Finance Minister Noda said today that the Japanese economy will probably resume its expansion this quarter after pledging yesterday to take “bold action” to curb yen gains if necessary. The currency’s climb and signs of a global slowdown threaten to hurt exporters.
Italy approved 45.5 billion euros ($64 billion) in deficit cuts to balance the budget and try to convince investors the country can tame the region’s second-biggest debt on Friday. The plan will raise the capital gains tax, increase levies on the highest earners, cut government spending and reduce funding to regional administrations. This came after ECB had asked Italy to make additional budget cuts before it would buy the nation’s debt on the market in a bid to arrest surging borrowing costs.
The yen and Swiss franc weakened against most of their major counterparts amid speculation policy makers in Japan and Switzerland will take further action to stem gains in their currencies. EURJPY moved up to 110.26 after Japanese FM Noda said he may intervene in the markets to weaken the Yen, USDJPY moved up to 77.09, EURUSD moved up to 1.4329 on speculation a meeting tomorrow between France and Germany will result in action to contain the region’s debt crisis, GBPUSD moved lower to 1.6265 as as global investors desert sterling amid the lowest inflation-adjusted bond yields on record and a faltering economy, USDCHF moved up to 0.7998 after the SonntagsZeitung newspaper said the Swiss government and the central bank are in “intense” talks over setting a target for their currency, AUDUSD moved up to 1.0441 and NZDUSD moved up to 0.8391 as gains in Asian stocks supported demand for higher-yielding assets.
US Empire Manufacturing index, Long term Treasury purchases, Housing market index and Fed’s Lockhart speaks today on the economy which form today’s important calender events. Markets would be looking forward to tomorrow’s RBA minutes of meeting while the intervention talks in Japan and EU debt issues hold focus.
By
M.Zohaib Gadit
Forex Trading Consultant, Shivani Financial
Address: Suite # 403, Portway Trade Centre, Main Sharah-e-Faisal
Opp. CDC Building, Near Nursery) Karachi,Pakistan.
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E-mail: zohaib.gadit@shivanifinancial.com
zohaibgadit@yahoo.com
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