MORNING BRIEFING: The Euro is under pressure following the drop in Industrial Production and negative inflation figures from France.

[RTFX-Trading]

MORNING BRIEFING: The Euro is under pressure following the drop in Industrial Production and negative inflation figures from France.

What’s new?
Euro zone: Record fall of over 20% in industrial production over one year in April.
France: Negative inflation figures in May for the first time in half a century.
Russia: Will not change the structure of its foreign exchange reserves.
United States: Higher import prices recorded at 1.30% in May.
Switzerland: Double taxation agreement France-Switzerland.

Today:
09h15 Switzerland: Import/ Export Price index May, exp 0.20%, previous -0.20%.
14h30 United States: NY Fed Manufacturing index, exp -4.50, previous -4.55.
15h00 United States: Net Long-term TIC flows April, exp $52.9B, previous $55.8B.
19h00 United States: NAHB Housing Market index June, exp 17, previous 16.

Overnight Rates and Indices:
EURUSD: 1.4002 – 1.3909.
USDCHF: 1.0849 – 1.0781.
GBPUSD: 1.6444 – 1.6351.
EURJPY: 137.83 – 137.00.
USDJPY: 98.56 – 98.11.
DowJones: 8'799 +0.32%.
NASDAQ: 1’859 -0.10%.
S&P 500: 946 +0.14%.
Nikkei: 10’062 -0.72%.
Gold: $934.

Comments:

The fall in industrial production in the euro area by more than 20% year on year in April (a record) and negative inflation figures from France in May (first time in over half a century) put pressure on the Euro as it fell to a low of 1.3935 on Friday against the Dollar.
    
As regards the G8, the objective of this meeting was to present strategies to emerge from the global financial crisis. Although the release mentions that exit strategies are essential to a sustainable recovery, there are divisions between the countries that adopt an individual strategy. The Germans, for example, want to wind down stimulus as soon as it is no longer needed, while the United States stressed that it is too early to reflect about such questions, and that they would like to see well established growth before considering such an approach.

This week, investors will look at housing starts and inflation numbers in the coming days, in the hope of confirmation of a resumption of recovery in economic activity in the United States. The monetary policy meeting of the Swiss National Bank and the Bank of Japan are also expected this week, the status quo is expected. In the euro area, the consumer prices index and the ZEW are the main figures, while in the UK, the calendar features the consumer prices index, as well as unemployment figures and retail sales numbers.
   
The Swiss and French governments signed a double taxation agreement, an agreement which concerns the fiscal year 2010. A simple question, not a proof, may be sufficient to motivate an inquiry into account. The request must be substantiated (for example explicit doubts, descriptions of the information sought etc…).

Have a nice week.

Emman Xuereb
RTFX Ltd
Head Office

Level 2, Suite 2, The Cornerstone Complex, 16th September Square | Mosta MST 1180 | Malta
Tel:  +356 23 31 00 00
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