Housing Data and Bernanke Speech
Investor sentiment is positive as markets anticipate real estate data and a speech from Federal Reserve chairman Ben Bernanke. News from overseas has generally been positive this morning, helping equity futures in the US gain on hopes that the global economy is recovering.
In Europe, Germany’s Purchasing Manager Index hit its highest level in 12 months with a 49.0 reading, indicating that general conditions are just on the cusp of growth. The equivalent index from France climbed to a 15-month high of 50.2 in August, suggesting slight expansion. The two better-than-anticipated reports helped Euro zone manufacturing beat expectations with a score to 47.9.
In the US, the main headline before the bell is that the ‘Cash for Clunkers’ has, once again, run out of the money. When the auto-trading scheme used up the $1 billion allocation in a single week in July, Congress expanded the program by giving an additional $2 billion to keep the program running until Labor Day. Once again, the program was wildly successful, and will be declared over next Monday at 8pm.
President Obama called the program “successful beyond anybody's imagination. And we're now slightly victims of success because the thing happened so quick, there was so much more demand than anybody expected, that dealers were overwhelmed with applications.”
Currency traders will want to check out the comments from Joseph Stiglitz, the Nobel laureate and former chief economist at the World Bank. Speaking in Bangkok, the Columbia professor said “the current reserve system is in the process of fraying.” He called the greenback “not a good store of value… given its low yield… [and] high degree of risk.”
The US$ is trading lower this morning, owing to strength in Europe’s manufacturing sector.
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