Euro: France versus Germany (page 2 of 2)

British Pound recovers despite lack of data

The UK economic calendar is completely devoid of any market moving data this week other than the final first quarter GDP numbers and the current account balance expected on Friday.

Fluctuations in EUR/GBP and the GBP/USD have been kept to a minimum as a result but things should pick tomorrow with the CBI distributive trades report due in the morning and the FOMC rate decision expected in the afternoon.

The outlook for the UK economy is still murky. Although no one can forget about the surprisingly strong retail sales numbers on Friday, BBA home loans continue to fall, reflecting the vulnerability of the UK housing market and the overall economy.

Earlier this week, Rightmove reported a 1.2% drop in house prices this month. The continual erosion in housing market wealth should prevent significant gains in consumer spending in the coming months.

Australian, New Zealand and Canadian Dollars edge higher

The Australian, New Zealand and Canadian dollars edged higher today on the heels of a slight drop in the US dollar and modest rise in commodity prices.

One of the biggest stories in the world of commodities was China's agreement to pay nearly double for iron ore.

This will have a significant affect on the prices of Chinese goods, which could eventually impact prices globally. No country has managed to escape the global inflation crisis, including China.

The Australian dollar on the other hand is benefitting from British Gas' A$13.8bn hostile bid for Origin Energy Ltd. If this deal goes through, it will most likely include a currency transaction in favour of the Australian dollar.

Yen Crosses slip on weak Japanese economic outlook

The Japanese Yen lost ground against most of the major currencies, as the Japanese Economic Policy minister said that the country's business outlook looks grim, due to rising oil prices.

In addition, she commented on the uncertain outlook for the second half of the year, as the Japanese economy remains heavily reliant on the US economy.

Investors look forward to Merchandise Trade Balance, Small Business Confidence and Corporate Service Prices this evening, in order to gain a better understanding of the business sector's health.

Japan is also expected to follow China in accepting higher iron ore prices, which would add pressure to inflation and growth.