The dollar is climbing against its major European competitors on Wednesday, but is down slightly against the Japanese Yen. The U.S. currency's safe haven status appears to be the reason for today's gains, as equity markets in Europe and the Unites States have sold-off sharply.
Barack Obama won his second term as President of the United States on Tuesday. Obama defeated Governor Mitt Romney, following what had been a very close race.
The Greek Parliament is voting today on a new round of austerity measures. If the parliament votes to approve the measures, then the country will be able to receive the next round of bailout funds. Meanwhile, Greek unions are participating in the second day of a 48-hour strike.
The European Commission expects the euro area economy to come to a standstill next year as domestic demand is likely to remain weak amid high unemployment. In its Autumn Forecast released on Wednesday, the commission slashed its 2013 growth forecast for the 17-nation economy to just 0.1 percent from the 1 percent projected earlier this year.
The economy is expected to shrink 0.4 percent this year, slightly worse than the 0.3 percent contraction forecast earlier. The economy grew 1.4 percent in 2011. Eurozone growth is expected to recover gradually to 1.4 percent in 2014.
The commission also downgraded its growth outlook for the biggest economy in the single-currency bloc. Next year, Germany is expected to grow just 0.8 percent, which is far weaker than the 1.7 percent forecast earlier. The economy is expected to expand 0.8 percent this year.
Germany's independent council of economic advisers were less optimistic than the government on the economy's outlook, according to the council's latest forecasts, handed over to Chancellor Angela Merkel on Wednesday.
The council of the so-called 'wise men' predicts the gross domestic product to grow 0.8 percent in 2012 and 2013, while the government forecasts the economy to grow 1 percent next year, following a 0.8 percent expansion this year.
The dollar fell to an early low of $1.2875 against the Euro Wednesday morning, but has since climbed to a 2-month high of $1.2735.
Retail sales in the euro area decreased at a slightly faster rate than economists expected in September, after recording a modest increase in the previous month, data released by statistical office Eurostat showed Wednesday.
Retail sales volume decreased 0.2 percent month-on-month in September, reversing the previous month's 0.2 percent rise. Economists had forecast a more modest decrease by 0.1 percent for September.
Germany's industrial production declined 1.8 percent in September from a month ago, the Federal Ministry of Economics and Technology said Wednesday. It follows a slower 0.4 percent drop in August and exceeded a 0.7 percent decline forecast by economists.
Industrial production adjusted for working days, slipped unexpectedly by 1.2 percent annually after falling 1.3 percent in August. Economists had forecast output to grow 0.1 percent.
Germany's construction sector contracted at a faster rate in October, driven by a steep decline in civil engineering activity, data from a survey by Markit Economics showed Wednesday.
The seasonally adjusted purchasing managers' index for the construction sector dropped to 44.6 in October from 48.6 in September. The latest reading was the lowest since July.
The buck weakened to a low of $1.6041 against the pound sterling early Wednesday, but has since bounced back to around $1.5975.
Shop price inflation in the United Kingdom accelerated in October, as wet summer lifted food prices, a report from the British Retail Consortium (BRC) revealed Wednesday. Shop price inflation accelerated to 1.5 percent in October from 1 percent in September. Food inflation increased to 4 percent from 3.1 percent in September.
The U.K.'s national output grew at a weaker pace in the three months through October, the monthly gross domestic product estimates by the National Institute of Economic and Social Research (NIESR) showed Tuesday.
The estimates suggest that the output grew 0.5 percent in the three months ending in October after a growth of 1 percent in the three months ending in September.
According to the think tank, the economy is likely to remain in "depression" for two more years. The institute interprets the term "recession" as a period when output is falling or receding, while "depression" is a period when output is depressed below its previous peak.
Moody's on Wednesday raised its outlook on Japan's banking system to stable from negative citing the stability in the banks' operating environment and asset quality and liquidity.
The greenback climbed to an early high of Y80.396 against the Japanese Yen Wednesday, but has since slipped to nearly a 1-week low of Y79.825.
by RTT Staff Writer
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