German Economic Data Pressures Euro As U.S Dollar Shows Strength

dollarEuropean stock markets are all in the red and the euro continues to weaken, weighted down by recession fears in Germany, Europe’s strongest economy, following news that Germany’s industrial production fell 4 percent from July to August. The drop represents the largest monthly decline in 5 years.

Today marks the second day in a row that the market has digested weaker than expected economic data from Germany.

After last Friday’s strong U.S. jobs report, the U.S. dollar climbed to a 4 year high amid signs that the U.S. economy is improving.

Some economists believe that the Federal Reserve could use the rising tide of strong U.S. employment data to justify raising short-term interest rates sometime in the first half of 2015.

Tomorrow at 2:00 EST the market will digest Fed Minutes from the Fed’s FOMC September meeting.

Minneapolis Fed President Narayana Kocherlakota, a voting Fed member, will also give a speech today in South Dakota.

There is little economic data scheduled to be released today and the rest of the week.

The strong rise in the U.S. dollar index in recent days has caused commodity prices to correct downwards as metals trade lower and commodity stocks feel pressure.

Metals are also feeling downward pressure with news of slower growth in China and a Chinese GDP growth rate falling closer to 7 percent.

The IMF is meeting today to discuss its new world outlook.

The IMF has just announced that it cut its growth forecast for emerging market economies.

“For emerging market economies as a whole, potential growth is now forecast to be 1.5 percent lower than it was in 2011” said IMF Chief Economist Olivier Blanchard.

-Johnathan Schweitzer

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