Last week overview, this week's key events

Source: Dukascopy Bank SA
Time is ticking, the Eurozone is falling further into yawning abyss and there are still no actions that would effectively save the Euro bloc from the downward spiral and bring it back to life. The German economy, European growth engine that has been losing momentum recently, contracted 0.2% in the June quarter following the 0.7% growth in the first quarter. France, the Euro region's second-biggest economy, failed to post any growth for a second straight quarter in the three months through June, while Italy's economy also contracted by 0.2% in the second quarter as well. Thus, the top-three Euro zone economies are mired into contraction spiral adding pressure on policy makers ranging from ECB officials to government politicians to bolster growth in a region, as the Eurozone recorded a zero growth in the second quarter, while inflation remained unchanged at 0.4%. The feeble recovery leaves the 18-nation bloc lagging behind other advanced economies such as the U.S. and the U.K. Despite constant attempts to escape the recently established trading range EUR/USD continues to move sideways. In order to revive the downward momentum the currency pair will have to break the support at 1.3350, this will imply a test of the demand area at 1.35 (2013 Q4 low and monthly S1). And while the near-term technical indicators are in favour of such a dip, monthly studies are still largely against the bearish activity.
Meanwhile, the U.K. continues to see its jobless rate falling to 6.4%, reaching the lowest level since December 2008 and the BoE hinted that it stays on course to hike interest rates early next year, given wage growth in the country increases. Nevertheless, the central bank cut its outlook for average wage growth, as it now expects average salaries to inch 1.25% this year, underscoring wage growth has become its key indicator for determining when interest rates are likely to increase. Inflation is expected to hover around the 2% level over the coming two to three years, while the estimate for the amount of slack in the economy has been cut from 1-1.5% to 1%.
As it was widely expected Japan shrank an annualised 6.8% from the prior quarter, the most since 2011, as the sales tax hike in April forced households to put off big-ticket items purchases. On a quarterly basis, Japan's GDP fell as much as 1.7%. Despite a negative data, the Japanese Yen showed a muted reaction, holding steady against the U.S Dollar.
This week those traders, who prefer trading AUD/USD, should pay close attention to RBA's Monetary Policy Meeting Minutes and Glenn Stevens Speech, while Pound-traders will find some more hints on future BOE's course of monetary policy from MPC Official Bank Rate Votes. The Fed will also provide some valuable information to the markets on August 20, when it releases FOMC Meeting Minutes. On top of that, as usual every August Jackson Hole Symposium will take place this week.

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Actual Topics

Mon, 18 Aug 2014 06:31:09 GMT

France disappoints, periphery countries show signs of revival

After a disappointing growth data from France, as the country recorded another quarter of zero growth, French Finance Minister Michel Sapin has admitted that the government's outlook of 1% growth this year is impossible to reach.

Fri, 15 Aug 2014 06:10:07 GMT

Australian inflation expectations lower in July

The inflation expectations in Australia fell to 3.1% in July from 3.8% the month prior.

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