The euro traded on a mixed note at the start of the week, losing against the US dollar, Australian dollar, Japanese yen, and New Zealand dollar but gaining versus the British pound, Canadian dollar, and Swiss franc. There were no major economic releases, though data did show that French industrial production rose for the second straight month in June while the Sentix measure of investor confidence rose to a 12-month high in August. However, there are clear risks to investor sentiment in the future, as highlighted by Andreas Schmitz, president of the Federal Association of German Banks. Schmitz said that there is a “concern” and a “real danger” of another credit crunch, saying that he does not think “it is entirely unrealistic to think there will be one.” Schmitz went on to say that “it is obvious that every bank will have more to deal with in the next 18 months, in terms of defaults by clients and non-performing loans, than they have had up to now.” These issues are not contained to Germany either, as other European and US banks must contend with growing defaults and charge-offs as unemployment rates continue to rise.
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