| Market Analysis Forex - 17 10 2011 |
 The G-20 Finance Ministers’ meeting will be in focus this week. We are not expecting too much from this, but it may give us a reasonable guide as to how the all-important G-20 leaders’ summit in Cannes in early November will go. We will hopefully get a better handle on what direction policy action on bank recapitalisation and the Eurozone sovereign debt crisis is heading and potentially some news on other stimulus measures to combat the increasing recession threat.In terms of the numbers, Eurozone sentiment indicators will be in focus. They will be under downward pressure and highlight the growing recession risk for the region. There will be a wide range of performance from the member states though. In Germany, the Ifo business climate index will provide more insight into how much of the latest drop in confidence was driven by the market turmoil and how much of the drop is for real. In the meantime, German companies are in good shape with full order books and a strong outlook for production. The recent increase in stock markets and increasing signs that the Eurozone is taking next important steps to solve the sovereign debt crisis, German companies should have become more optimistic again. In the UK, the minutes to the MPC meeting will tell us how many officials voted for further QE. We would not be surprised to see a unanimous decision given comments from officials. It will be interesting to see the debate on the size of QE. US September existing home sales should fall back a little, after an unexpectedly strong rebound in August. New housing starts may have increased slightly and homebuilder confidence with it but the real story there is that construction activity remains at historic lows and will not stage a meaningful recovery before the high number of distressed existing sales starts to come down. That is something we do not expect to happen soon. As for the consumer sector, rising equities and better jobs news may boost sentiment while robust auto sales point to firm retail sales growth. |
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