At 4:00 AM Eurozone June Current Account Balance (exp –2.0 bln euros, prev –8.6 bln euros)
At 5:00A M Eurozone June Industrial Orders m/m (exp 2.0%, prev 1.7%)
Eurozone June Industrial Orders y/y (exp 12.4%, prev 9.1%)
Markets remain on edge amid continued uncertainty stemming from burgeoning fears of a global credit crunch -- leaving traders to ponder the outlook for the US economy. Early in the Tokyo session, the sterling came under pressure against the dollar and yen as rumors of a UK insurer holding substantial subprime positions began circulating the trading desks, pushing the pound to 153.40 versus the yen and toward the 1.98-level against the greenback. We expect further volatility in the coming months as a result of possibly more revelations of subprime holdings deteriorating balance sheets, requiring either substantial write-offs or even bailouts.
Senate Banking Committee Chairman Dodd met with Fed Chairman Bernanke and Treasury Secretary Paulson, saying that Bernanke vowed to use “all tools available” to stabilize volatility in the financial markets. Paulson expressed that he has the utmost confidence in how Bernanke is handling the current credit crunch. Nevertheless, Dodd stressed that the Fed was an independent agency and should not be pressured into cutting rates.
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