U.K. Home Prices Slip to Record Low, Trade Conditions Unexpectedly Improves

Fundamental Headlines

• Newly Bailed-Out AIG Reports Huge Loss – Wall Street Journal
• Retail Losses Sap a Jobs Safety Net – Wall Street Journal
• AmexCo converts to bank holding company – Financial Times
• GM's Skid Quickens as Crunch Raises Bankruptcy Threat – Bloomberg
• Citi Will Halt Some Foreclosures, Rework Mortgages – Bloomberg

• GBPUSD – The DCLG House Price index fell another 5.1% to reach a record low in September following a 4.6% decline in the previous month, which suggests that home values may continue to fall further as the credit market remains under stress. The lack of stability in the global financial market will only prolong a recovery in the housing sector, and conditions may only get worse over the coming months as Europe’s second largest economy heads into a recession. Meanwhile, the U.K. trade deficit unexpectedly narrowed to -3.9B from -4.4B in August due to an increase in export demands. The depreciation of the British pound has certainly helped to raise demands from abroad, but the rebound in exports could be short lived as fears of a global recession intensify. Discuss the topic and your trade ideas in the GBP/USD Forum.

• EURUSD – The German ZEW investor confidence survey unexpectedly improved to -53.5 from -63.0 in October as policymakers all over the globe increase their efforts to stave off further downturns in the global financial market. The extraordinary measures taken on by governments worldwide has certainly helped to calm fears of a global meltdown, but the lack of stability in the credit sector paired with mounting turmoil in the financial sector suggest that policymakers will continue to increase their efforts to restore confidence and to support economic activity over the near-term. Meanwhile, the German Wholesale Price Index fell 1.5% in October despite expectations for a 0.9% decline. In addition, the annual rate slipped to 3.6% from 5.8% as commodity prices continue to pull back from their record highs. Easing price pressures will certainly allow the European Central Bank to hold their dovish outlook, and may lead policy makers to lower borrowing costs even further over the coming months as the Euro-Zone teeters on the brink of a recession. Discuss the topic and your trade ideas in the EUR/USD Forum.

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