DAILY ANALYSIS
By Justrader.com - October 15th 2012
The euro falling off again Monday in a cautious market before the EU summit on 18 and 19 October and Thursday publication of figures on the growth of the Chinese economy that the slowdown could continue.
"The decline of the euro is not linked to specific information but by the flow of sales, likely foreign investors," said a trader for a Japanese bank surveyed by Dow Jones Newswires.
The single currency seems to suffer from a lower risk appetite, as other currencies considered less reliable than the dollar or the yen as the Australian dollar hit by concerns about the health of the Chinese economy, said other brokers.
The rate of inflation in China fell 1.9% in September, against 2% in August, according to official figures announced Monday.
"The inflation figures continue to show a slowdown in demand, with prices production contract in a timely manner," said Alistair Thornton, an economist at IHS Global Insight based in Beijing. "Undoubtedly there is still the economy to stabilize."
For months, the second largest economy regularly gives signs of slowing down, despite the measures taken by Beijing, such as lower interest rates or reduced reserve requirements for banks.
The market is awaiting the publication Thursday of GDP statistics for the third quarter in order to better assess the condition of the premises. The Chinese economy had grown by only 7.6% in the second quarter, its worst performance in three years.
In addition, investors are waiting to know the developments in the euro area and especially in Spain and Greece, the two countries most vulnerable whose fate will be discussed at the European Summit on 18 and 19 October.
Prime Minister Antonis Samaras insured, a Greek newspaper published Sunday that spending cuts and tax increases required by the troika of creditors (IMF, EU, ECB) would be approved "in the coming days" by Parliament.
By the beginning of the European Summit, he added, the Greek government and the troika "will come to an agreement on the fiscal measures and structural reforms to be implemented in advance" to obtain a new credit line of € 31.5 billion, pending since June.
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