Speculations of another bailout plan in the Euro area failed to restore confidence in the sixteen nation's currency, where it headed down south trading currently at 1.2589 levels, the exposure of those economies to the Eastern Europe's tumbling financial sector might be the main reason behind upcoming bailouts.
Europe have been tumbling with the ongoing credit crunch even after the Commission had approved several bailout plans that were subdued toward mitigating the endless downturn in the sixteen economies. However, apparently those plans had failed to restore back the long lost confidence that dispersed in the preceding year especially when the European dilemma started with the surging inflationary pressures altering to the first recession since the Euro was established.
Sectors in the zone contracted heavily affected by the curbed international and domestic demand on various products; citizens and investors are increasing their level of private saving preparing themselves to the worst especially markets projections clears that the worst is not over yet.
European Central resisted from trimming their benchmark rates this month believing that the current conditions does not need a rate cut, yet the downturn seen and the deepening recession will obligate the European Central Bank to consider slashing their rates down by 50 basis points in attempt to revive back the economy.
Today, our calendar will unfold some European fundamentals clearing that manufacturing and the services sector will continue to contract. However, market projections clear that some improvement seen, with the PMI manufacturing climbing to 35.0 levels from the previous 34.4, also the PMI services inched higher to 42.5 levels from the previous 42.2.
The Germany PMI Manufacturing reading improved in February to 32.5 levels from the previous 32.0 levels according to market projections, on the contrary the services inched lower to 45.0 levels from the previous 45.2 levels.
In addition, markets are waiting for Trichet Speech that will take place in Paris today, according to prediction Trichet might hint to a rate cut in the coming meeting. So more confirmations are taking place and a cut being priced in markets already; so with the deteriorating outcomes the Europeans might be forced in order to use some other methods to bolster their economies.
Markets are also waiting for the Royal Retail Sales reading with expectations that sales had fallen in January to -0.1% on the month and eased to 2.1% from the previous 4.0%. The ongoing woes in financial markets that continue to materialize on the real economy would pressure sales more into minus levels.
Moving to the North American continent…
The US producer prices unexpectedly rose yesterday for the first time in six months, with the monthly prices rising 0.3% and the yearly falling only 1.0% coming better than markets expectations. The main reason behind this rise was vast inclined in the energy prices which reaching to 3.7% from the previous -9.1%.
According to those reading markets, project that prices inclined 0.3% on the month from the revised previous -0.8%, the yearly consumer prices inched lower to -0.1% from the previous 0.1% along with the Core CPI easing down to 1.5% from the previous 1.8%.
The rising prices might minimize the ongoing threats of Deflation but it will not terminate those projections because the world slowdown along with the falling crude prices might pressure it down south recording lower levels.
Crude prices surged yesterday to record a high of $40.23 per barrel; especially after the US crude oil, inventories fell 0.2 million barrel from the previous 4.7 million barrel. Yet April contract opened at $39.55 per barrel falling to currently trade at $39.25 per barrel.
Therefore, our calendar contains some fundamentals from major world economies that would give us some signals on the futuristic outlook…