In the US, Friday saw the release of the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment which dropped to 72.0 in July from 73.2 in June disappointing the markets which had expected a reading of 73.4. The US Dollar index which measures the USD against a basket of 6 weighted currencies was down 0.42%, valued at 83.43.
In slumping Asia, China reported that its economy had grown at its slowest pace in three years with GDP increasing by 7.6% in the 2nd quarter, compared with the same period a year ago and is down from the 8.1% in the previous 3 months and is the country’s worst figures since the start of the global financial crisis. As the world’s largest exporter, China is being hard hit by the slowdown in Europe and elsewhere having cut its growth target in March for the whole of 2012 to 7.5%.
Italy saw its rating cut 2 notches from A3 to Baa2, just 2 levels above junk status and increasing concerns of a contagion risk from Spain and Greece. The Euro was down to a near 2 year low against the greenback, but still managed to finish up 0.38%, against the USD. Italy raised 3.5 bn euros in an auction of medium term government bonds on Friday with the rate falling to 4.65% from 5.3% last month, however Moody’s warned of increased borrowing costs in the future for the eurozone’s 3rd largest economy. Whilst its banks are less exposed to bad loans as is the case in Spain, Italy has ingrained structural problems including an inefficient public sector low productivity, and a noticeable north – south divide.
In April, the government reduced its growth forecast for 2012, predicting a 1.2% contraction compared with the previous forecast of a 0.4% contraction. However, the IMF has predicted that the Italian economy to contract by 1.9% this year.
Monday is a Japanese national holiday, but sees the release of important retail sales data in the US as well as Swiss Industrial production European CPI figures, making it an interesting day for binary traders.
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