The dollar is attempting to bounce back from some recent losses against its major competitors Wednesday. The FOMC meeting began today and investors will be watching for Thursday's announcement, upon the completion of the meeting, and the subsequent press conference from Fed Chairman Ben Bernanke.
Germany's top court has cleared the way for the ratification of the European Stability Mechanism, or ESM, rejecting temporary injunctions against the bailout fund and the fiscal compact in its much-anticipated judgment on Wednesday. However, the court imposed certain conditions, including capping Germany's ESM liability.
The court said Germany must cap its bailout fund liability at EUR 190 billion and further expansion of the country's ESM share needs to get the backing of the Parliament. Also, both houses of the Parliament must be informed of any decisions on the ESM in future, the Court said.
"No provision of this Treaty may be interpreted in a way that establishes higher payment obligations for the Federal Republic of Germany without the agreement of the German representative," the court said in a statement.
European Commission President Jose-Manuel Barroso on Wednesday proposed a single supervisory mechanism (SSM) that will give sweeping powers to the European Central Bank, including overview of some 6,000 banks across Europe.
The new mechanism will give ultimate supervisory responsibility related to financial stability of all banks in the euro area to the ECB. Nonetheless, national supervisors will continue to play an important role in day-to-day supervision and in preparing and implementing ECB decisions.
The dollar fell to a 4-month low of $1.2936 versus the Euro Wednesday morning, but has since climbed back to around $1.2890.
Industrial production in the euro area increased in July, recovering from the previous month's decline, and the rate of growth exceeded economists' forecast, data released by statistical office Eurostat showed Wednesday.
Industrial production increased 0.6 percent on a monthly basis in July, reversing June's 0.6 percent decrease. Economists were looking for a 0.1percent gain.
Germany's inflation, measured by the harmonized index of consumer prices (HICP), rose to 2.2 percent in August from 1.9 percent in July, final data released by the Federal Statistical Office confirmed Wednesday.
French annual inflation rose more than expected in August, data from the statistical office Insee showed Wednesday. EU harmonised annual inflation came in at 2.4 percent in August, up from 2.2 percent in July and slightly above the 2.3 percent rise forecast by economists.
French current account deficit declined in July, data published by the Bank of France showed Wednesday. The current account deficit narrowed to EUR 2.5 billion in July from a EUR 4.8 billion shortfall recorded in June.
Employment data should serve as a better guide in policymaking than changes in output, Bank of England Monetary Policy Committee Member Ben Broadbent said Wednesday.
"As monetary policymakers, we should probably pay less attention to movements in output and relatively more to changes in employment," Broadbent said in a speech at Durham Business School, the text of which was published by the central bank.
The buck reached a 4-month low of $1.6130 versus the pound sterling Wednesday morning, but has since inched back to around $1.6105.
A leading indicator of the British economy increased in July, after falling in the previous months, as rising stock prices and consumer confidence offset continued pessimism from manufacturers, data from a survey by Conference Board showed Wednesday.
The leading economic index increased 0.1 percent month-on-month to 101.7, following a 0.4 percent fall in June and a 1 percent decline in May.
U.K. claimant count declined in August at the sharpest pace since June 2010 due to an increase in temporary hiring for the Olympics, data from the Office for National Statistics revealed Wednesday. The number of people claiming Jobseeker's Allowance dropped 15,000 in August from the prior month to 1.57 million. Economists had forecast the number to remain flat in August after falling 13,600 in July.
The greenback has rebounded slightly from Tuesday's low of Y77.692 versus the Japanese Yen, to around Y77.850 on Wednesday.
Core machine orders in Japan climbed a seasonally adjusted 4.6 percent on month in July, the Cabinet Office said on Wednesday - rising for the second straight month. The headline figure was sharply higher than forecasts for an increase of 2.0 percent following the 5.6 percent jump in June and the 14.8 percent plunge in May.
An index measuring tertiary industry activity in Japan was down a seasonally adjusted 0.8 percent on month in July, the Ministry of Economy, Trade and Industry said on Wednesday - coming in at 98.7. That missed forecasts for a contraction of 0.5 percent following the upwardly revised 0.2 percent increase in June.
With fuel prices showing a notable rebound in the month of August, the Labor Department released a report on Wednesday showing that U.S. import prices rose for the first time in five months. The Labor Department said import prices rose by 0.7 percent in August following a revised 0.7 percent drop in July.
However, economists had expected import prices to surge up by 1.5 percent compared to the 0.6 percent decrease originally reported for the previous month.
Meanwhile, the Labor Department said U.S. export prices increased by more than expected during the month of August amid another notable increase in prices for agricultural exports. The report showed that export prices increased by 0.9 percent in August after rising by a revised 0.4 percent in the previous month. Export prices had been expected to rise by 0.5 percent, matching the increase originally reported for July.
U.S. wholesale inventories rebounded more than expected following an unexpected drop in June, although July wholesale sales continued to slow following a precipitous drop the previous month. According to figures released Wednesday by the Commerce Department, U.S. wholesale inventories were estimated at a seasonally adjusted level of $485.2 billion, up 0.7 percent from revised June levels.
That marks a stronger than expected rebound from the 0.2 percent drop in June inventories - a level that was essentially unrevised from initial reports, according to the Commerce Department. Most economists had predicted a smaller, 0.4 percent, increase in wholesale inventories for the month.
by RTT Staff Writer
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