The ECB Has Room to Raise Interest Rates?! (page 2 of 2)

Meanwhile Switzerland will be releasing the UBS Consumption Index and the KoF report of leading indicators.

Is the UK headed for a recession?

GDP growth slowed in the second quarter, but the British pound managed to rally.

The pace of growth has fallen from an annualized rate of 2.3% to 1.6%, the lowest level since the first quarter of 2002 and equaling the 15 year low.

Weak consumer spending has been the primary drag on the UK economy and given the recent trend of growth, the country could be headed for a recession which is defined by two quarters of negative GDP growth.

The pace of deterioration in the UK economy has picked up towards the end of the second quarter which implies that unless there is a serious turnaround in the UK economy, the country could be headed for a contraction in the third quarter.

We are bearish British pounds and expect the currency to underperform many of the major currencies.

Aside from manufacturing PMI and some housing market data, the UK economic calendar is relatively light next week.

Oil prices continue to fall, taking the Canadian Dollar lower

There was no economic data released from the three commodity producing countries today, leaving the price action of the currencies dependent upon oil prices.

Crude continues to trend lower and ended the day at $123.39 a barrel.

This has weighed heavily on the Canadian, Australian and New Zealand dollars.

Although oil and gold prices will continue to play a big role in the price action of the commodity currencies, there are a few pieces of key data worth watching next week.

New Zealand and Australia both have trade data due for release, Australia also has retail sales while Canada will be releasing their GDP report for the month of May.

Yen Crosses rebound as risk appetite stabilizes

The Japanese Yen crosses rebounded today as the stock market and risk appetite stabilizes.

Like the rest of the world, Japan has also been hit by inflationary pressures.

The latest inflation data shows that core inflation has hit a 10 year high due to rising food and gasoline prices.

This has been a huge drag on the Japanese economy and part of the reason why the trade surplus fell for the first time in five years last month.

The deterioration in trade was significant with the surplus falling a whopping 89% in June.

Japan is having a particularly tough time with slowing export demand and surging import prices, which is why the BoJ has turned bearish on the economy.

There are a lot of Japanese economic data due next week including the jobless rate, retail sales and industrial production.