Intraday Market Thoughts

Germany Nearing Contraction Zone

by Kyle Morrison
Oct 18, 2011 10:55

Germanys ZEW Current Situation index dipped to a 15-month low in October at 38.4 from 43.6, while the ZEW Expectations Index deteriorated to -48.3 from -43.3, its worst level since November 2008. The figures are in line with the September 21 charts, calling for a contraction in Germany (see first chart on left) UK inflation jumped to a 3-year high of 5.2% y/y from 4.5%. As prominent as this figure appears, it could well portend a similar occurrence as in Sep 2008, when the CPI peak, was followed by a sharp decline. USD & JPY are the big winners of the day as risk aversion broadens. There was no surprise that Chinas Q3 GDP slowed to 9.1% from 9.5% at a time when the US is pressuring Beijing to revalue its currency. As a result of the figures, China lowered the CNY vs USD by 0.10 to 6.38, challenging the demands by the US. Premium Trades are due at 7:30 EST, 11:30 GMT


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