Latest indicators show euro zone recovery is limping along; U.S. economic indicators provide few useful clues to forex traders

Sept. 2, 2010 | Written by Jeffrey Winograd

No surprises in economic indicators – Key euro zone economic indicators released this week may add a bit of gloom but certainly no doom for the euro zone. In a monetary policy decision that surprised no one, the European Central Bank today decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 1%, 1.75% and 0.25%, respectively. Jean-Claude Trichet, president of the ECB, said during a press conference that he doesn’t foresee a double-dip recession for the euro zone. In its first estimates for the second quarter of 2010, Eurostat said euro zone gross domestic product (GDP) was up 1% compared with Q1. In the first quarter of 2010, growth rate was up by 0.3%. Regarding the jobless picture, in July, the euro zone unemployment rate remained stable at 10%. The euro zone seasonally-adjusted unemployment rate was 10% in July, unchanged compared with June. It was 9.6% in July 2009. Finally, euro zone annual inflation is expected to be 1.6% in August 2010, according to a flash estimate issued by Eurostat. The inflation rate was 1.7% in July.

Indicators released on jobless claims, manufacturing and home sales – The latest U.S. economic indicators do not provide a crystal ball for forex traders. In the week ending Aug. 28, the advance figure for seasonally adjusted initial unemployment insurance claims was 472,000, a decrease of 6,000 from the previous week. In the week ending Aug. 14, there were 504,000 such claims. When compared to the overall average for the year to date, which is 463,000, analysts see the latest number as a sign that employers remain reluctant to hire. The unemployment rate for August will be announced on Sept. 3. According to the Institute for Supply Management, manufacturing continued to grow in August as its PMI registered 56.3, up from the July figure of 55.5. A reading above 50 indicates that the manufacturing economy is generally expanding, while a number below 50 shows a general contraction. The 12-month average is 56.6, with a high of 60.4 in April and a low of 52.4 in September 2009. The latest index of pending home sales from the National Association of Realtors also released today jumped 5.2% based on contracts signed in July. The data reflects contracts and not closings.