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For the second day in a row, the Euro has been pushed lower, due to traders pouring back into US dollars. In Germany, the business confidence has dropped to a 10 month low for August. Business have been more optimistic about current conditions, however, their fear of the coming business conditions in the months ahead continues. There have been rumors that German banks have been keeping silent about subprime related losses. This could prove to be dangerous when earnings are released, since the problems will be revealed. ECB President Trichet has been noncommittal about a rate hike in September, and said simply that the ECB will decide what must be done with interest rates at the monetary policy meeting. The Swiss UBS consumption index has meanwhile dropped from 2.311 to 2.261, suggesting that the KoF index of leading indicators may also suffer. The index is due out tomorrow.
The British pound fell below 2.0 when risk aversions sent the US dollar higher. The July BBA mortgage approvals, which fell to 67k from 75k, was the only piece of economic data that was released by the UK this morning. One encouraging factor is that the rate of decrease has slowed somewhat. There is no economic data from the UK due for release tomorrow, and concerns continue about the subprime sector and the losses in US stocks causing a further decrease in the British pound.
14:19
Posted on Aug-30-2007
