The Euro gains after German retail sales rise on consumer spending

The euro gained against the greenback after a German report showed retail sales increased for the first time in three months, adding to signs the 16-nation region is emerging from recession. European Central Bank Governing Council member Ewald Nowotny said yesterday he doesn’t expect a double-dip recession in the euro region as long as policy makers don’t hurry to remove emergency stimulus measures. “I don’t see a perspective of a W-shaped recession if there’s no premature exit strategy,” Nowotny said in a panel discussion in Alpbach, Austria. “What I see is the danger that we’ll have very low rates of positive growth for some time.” The ECB will keep its main refinancing rate at 1 percent at its Sept. 3 meeting, according to all 58 analysts surveyed by Bloomberg. The EUR/USD is currently trading at $1.4360 as of 8:45am, London Time.

The British Pound inched up on Friday after figures showed the UK economy contracted at a slightly slower rate in the second quarter than initial estimates. "The data was slightly stronger than expected and had a slight effect on sterling," said Paul Robinson, sterling strategist at Barclays Capital in London. Both the GDP and the investment figures added to the market's belief that UK interest rates will remain at a record low 0.5 percent for some time to help boost the economy. The Sterling has suffered this month after the Bank of England announced it would extend its quantitative easing measures by increasing its asset-purchasing programme to 175 billion pounds. The UK’s Manufacturing PMI this morning came out worse than expected, the sterling has dropped back into the $1.62’s.

The U.S. dollar may slide 6 percent toward 87 yen if it falls below support clustered around the July low of 91.74 yen, JPMorgan Securities Inc. said, citing trading patterns. The decline in the dollar yesterday “took on a more impulsive bias with the break of the key 93.20-93.10 support area and raising the risk of a deeper decline and retest of the critical” July low, wrote Niall O’connor, a technical currency analyst in New York at JPMorgan, in a note to clients today. “The short-term setup argues for some bounce from this area, but note there is still no sign of a basing pattern.” The USD/JPY is currently trading at 93.30 as of 9:08am, London Time.

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