Eurozone gained confidence today
Euro Surge On Stress Test Leaks
The Euro rose significantly yesterday rising up to 1.2991 against the dollar and breaking, although briefly 1.30, a ten week high. The gains were owed to more weak data from the US where home-builder sentiment fell more than expected in July to the lowest level in over a year and comments from many of the EU countries stating their most important banks had passed the stress tests. Germany, whose sources said Deutsche Bank and Commerzbank passed the tests look set to see Hypo Real Estate, a small nationalised mortgage lender fail, and it could be the first of many banks who specify in that market. With the housing market across Europe still struggling, banks who exclusively work in that sector could have overly exposed balance sheets and be the next to require a takeover or even a bailout.
The Eurozone also gained confidence from comments by Germanys Finance Ministry stating in their monthly report that they feel "the economy has grown significantly in the second quarter and that the recovery should strengthen further in the second half of the year". The Euro has also gained massively against Sterling falling well back from the high of 1.2380 3 weeks ago to 1.1750. The BoE will be releasing the MPC Meeting minutes from the July rate decision tomorrow where we will find out more details to the divide growing in the committee.
Todays data from the UK proved negative for Sterling with Mortgage approvals showing 48k, below forecasts of 52k though the Public finances did stay level from the previous month, better than the expected -0.1%. The Bank of Canada announces their rate decision at 2 pm London time with the BoC expected to increase the base rate by 25bp to 0.75%.