Although some optimism was seen within the financial markets this morning after Google agreed to buy Motorola Mobility for $12.5 billion in its largest acquisition while Warren Buffett said “I like buying on sale”, the release of the German and EU’s GDP managed to increase demand on safe haven once again.
Germany released a worse than expected GDP report today. Growth slowed in the second quarter to 0.1% from 0.5% expected and 1.5% previous, sparking concerns about a possible slowdown in the region. Growth also slowed in the EU to 0.2% from 0.3% expected, confirming those fears.
This data is adding pressures on the policymakers to act fast and solve the region’s debt problems. Thereby the leaders of Germany and France, Chancellor Angela Merkel and President Nicolas Sarkozy, will meet today in Paris to discuss potential solutions to Europe’s debt crisis.
No concrete solution are expected, thereby investors started looking for safe haven. Meanwhile the yen continues to trade within the strongest parts of its range around 76.77. The CHF strengthened today trading around 0.7805 despite a possible invention by the Swiss National Bank.
Gold continues to trade near its highs around $1777.00 per ounce, while oil fell slightly trading around $86.90. The dollar index is trading near today’s highest of 74.16 although the empire manufacturing index was very disappointing yesterday which puts the manufacturing sector in an alarming position.
Today the U.S. will release its building permits and housing starts numbers along with the industrial production for the month of July, yet eyes will be Europe today, since the global conditions are deteriorating and a possible recession started being discussed.
The euro fell today from a three-week high versus the dollar trading as of this writing around the 1.4395 level. The GBP however saw some limited losses, trading around the 1.6375 as of this writing, after a report showed than inflation rose more than expected during July to 4.4% from 4.2% previous, adding pressures on BoE to increase rates.