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Forex Blog - European Market Update: BOE Split 3 Ways on August Rate Vote
¬∑*** DATA ***
¬∑SZ July M3 Money
Supply Y/Y: 1.5% v 1.9% prior || Prior revised from 1.5% to 1.9%
July Public Finances: -¬£12.6B v -¬£10Be || Prior revised from ¬£15.5B to ¬£15.
¬∑UK July Net Borrowing: -¬£4.8B v -¬£4.3Be || Prior revised from ¬£9.
2B to ¬£9.6B
¬∑UK July Preliminary M4 Money Supply: M/M 0.9% v 0.5%e
|| Y/Y 11.2% v 10.7%e || Prior Y/Y revised from 11.4% to 11.3%
July Preliminary Sterling Lending: ¬£14.3B v ¬£14Be || Prior revised from ¬£46.
1B to ¬£46.7B
¬∑UK BOE Minutes: BOE Voted 7-1-1 to hold rates at 5.
00% at the August 7th meeting
¬∑EU June Construction Output: M/M -0.
6% v 0.1% prior || Prior m/m revised from 0.2% to 0.1% |||| Y/Y -2.4% v -1.
6% prior || Prior revised from -1.1% to -1.6%
¬∑UK Aug CBI Industrial
Trends: -13 v -8 prior
¬∑In equity news overnight
Citigroup recommended ‚Äúoverweighting‚ÄĚ Brazilian banks. Grupo Ferrovial
[FER.SP] announced overnight that the Competition Commission may force BAA
to sell three airports. Ericsson [ERICB.SW] and STMicroelectronics [SEM.FR]
announced a joint venture. STMicroelectronics and Ericsson announced an
agreement to merge Ericsson Mobile Platforms and ST-NXP Wireless..
¬∑According to the Financial Times 3i [III.UK] is in deal to take
over Acciona's [ANA.SP] funeral operator. 3i plans to re-enter the European
funeral services market following a deal to acquire a 75% stake in Spain's
Memora Inversiones Funerarias. The stake is being sold by the Spanish
construction and energy group Acciona in a deal that places an enterprise
value on Memora of ‚ā¨330M The Economic Times wrote overnight that Fiat [F.
IT] Fiat and Tata Motors [TTMT.IN] may seek to jointly manufacture next-
generation Jaguar and Land Rover engines. According to TV2 Danske Bank
[DANSKE.DC] sees losses at its Irish unit over the next 12 to 18 months.
¬∑On the speaker front the German BDB Association reiterated its
2008 GDP growth forecast of 2.25%-2.5%, and its 2009 forecast of 1.0%-1.5%.
The BDB also said that higher ECB rates is no longer topical, adding that
they see a chance for 2.0% inflation in 2009. The Bank of England minutes
from the August 7th meeting showed that the BOE voted 7-1-1 to hold rates
at 5.00%, with MPC member Besley voting for a 25bps rate hike, and
Blanchflower voting for a 25bps rate cut as was widely expected. The MPC
noted that all three options were considered at the meeting. The BOE said
that the growth outlook has deteriorated in the past month, adding that
inflation has eased somewhat. The majority argued that a rate increase
would have risked hurting confidence, while a cut risked keeping inflation
elevated. The BOE noted that wage growth has remained subdued, and noted
that most members see inflation risks remaining on the upside. The German
Economic Ministry said overnight that the German economic outlook darkens
beyond the second quarter.
¬∑*** NOTES ***
¬∑As is typical of
the post-earnings season rush markets were quiet overnight. Minutes from
the Bank of England's August 7th policy-setting meeting were the biggest
release overnight, but failed to wake up the sleepy August markets. The
minutes did however dampen expectations that perhaps the BOE would opt for
an early rate cut.
¬∑‚ÄúDon't be seduced into thinking that that which
does not make a profit is without value.‚ÄĚ - Authur
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