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Forex Blog - European Market Update: UK Production Data Falls Below Expectations
*** ECONOMIC DATA ***
¬∑SZ June Unemployment Rate: 2.3% v 2.3%e
¬∑SZ June Unemployment Rate sa: 2.5% v 2.5%e
¬∑SW June Budget Balance: SEK13.8B v SEK13.5B prio
¬∑NO May Industrial Production Manufacturing: M/M -0.7% v -3.3%e || Y/Y 5.6% v
¬∑EU July Sentix Investor Confidence: -9.3 v 2.5e
¬∑UK May Industrial Production: M/M -0.8% v -0.1%e || Prior revised from 0.2% to
0. 1% |||| Y/Y -1.6% v -0.8%e || Prior revised from 0.2% to 0.1%
¬∑UK May Manufacturing Production: M/M -0.5% v 0.0%e || Prior revised from 0.1%
to 0.0% |||| Y/Y -0.8% v -0.1%e || Prior revised from 0.1% to 0. 0%
¬∑GE May Industrial Production: M/M -2.4% v 0.3%e || Prior revised from -0.8% to
-0.2% |||| Y/Y 0.8% v 3.5%e || Prior revised from 4.8% to 5. 0%
¬∑*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
¬∑In equity news overnight APP Pharmaceuticals (APPX) announced overnight that
it will be acquired by Germany's Fresenius SE [FRE.GE] for $23/share in cash.
The deal has a potential acquisition price of $29/share if certain financial
conditions are met. Fresenius will also assume all of APP's outstanding debt
which currently totals approximately $940M, net of cash. In aggregate the
consideration for the acquisition of APP, including the CVR, could be up to
$5.6B. Bang & Olufsen [BOB.DC] guided FY08 revenue at DKK4.1B vs. estimates
of DKK4.3Be, pretax at DKK155M vs. estimates of DKK245.5M, and operating profit
at DKK195M vs. estimates of DKK284.2Me, citing global market uncertainty.
Awilco Offshore [AWO.NO] announced that it will be acquired by China OilField
[883.HK] for NOK85/share. The deal is valued at NOK12.7B and represents an
18.7% premium to Friday's closing price.
¬∑In the newspapers the Sunday Express wrote that Bradford and Bingley [BB.UK]
is set to issue more profit warnings. According to the Times Alliance &
Leicester [AL.UK] is planning a substantial dividend cut to shore up its
finances. The move is expected to save the bank about ¬£80M a year. The Independent
wrote overnight that Barratt Developments' [BDEV. UK] problems could be eased by the sale of
Wilson Bowden Developments, its commercial property arm. According to the Mail
on Sunday Taylor Wimpey [TW. UK] is undertaking a review of all its
operations for potential asset sales.
¬∑In energy related news Bertha became the first hurricane of the season. The
storm was last located about 845 miles East of Northern Leeward Islands, and
had maximum sustained winds of 65 knots (75 mph). The storm was heading West-Northwest
at 17mph, and had a minimum central pressure 994mb.
¬∑In the currencies the USD was aided by numerous factors at the start of the
week. Dealers citied some return of risk appetite, steady equity markets, and
the drop in commodity prices into the G8 have all helped the USD maintain a
firm tone ahead of the US open. The EUR/USD is around 1.5650. The GBP/USD is
currently lower by about 100 pips at 1.9715 following UK industrial production data that came in
¬∑French Finance Minister Lagarde said overnight that she is not fully satisfied
with the ECB's rate decision adding that it is reassuring to hear that there is
no new rate hike is planned at the next ECB meeting. Lagarde said that the
ECB's decision increases imbalances with US monetary policy, adding that the Euro
remains overvalued with 4.25% interest rate, noting that the USD will remain
weak with an interest rate of 2.00% (225 bps Euro positive carry trade).
¬∑*** NOTES ***
¬∑Euro-Zone sentix investor confidence was down sharply in July, but was only
the lowest reading since May 2005. All components and sub-components posted
noticeable declines in July.
¬∑Tuesday looks more like a holiday than anything else with little data penciled
in on the cards. The tempo will pick up a bit on Wednesday. Don't forget the
BOE rate decision this Thursday, and the Canadian jobs data this Friday.
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