User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Friday June 6, 2008 - 10:17:50 GMT
Foreign Exchange Analytics -

Share This Story:
| | Email

Forex Blog - Trichet Signals Rate Hike Likely, Every Central Bank for Themselves

It was déjà vu all over again today as Trichet shot a strong-dollar-accord notion in the head and drove a stake through the heart of coordinated global monetary policy.  In May Trichet was ardent about risks to inflation and confident on economic fundamentals (growth) just days after US Treasury Secretary Paulson tried to let markets know that the US Treasury really does want a strong dollar after all.  Euro/dollar decline reversed.   Monday and Tuesday in an unprecedented fashion Paulson and Bernanke tag teamed to talk the dollar higher fanning speculation that something far more serious was underway to at the very least keep the dollar from depreciating, though the apparent emphasis was higher would be better than stable.  Trichet and the ECB (let’s not forget that this is an unwieldy group of central bankers and not simply his show) needed to check inflation concerns, highlight risks to growth and reiterate that markets should pay attention to what Paulson and Bernanke said about the dollar this week to be Stanley Laurel to the Fed’s Oliver Hardy.  Instead Trichet was the anti-MacGyver…not the fixit man but the break it man. 

If price stability is the altar of the ECB’s cathedral, then growth, coordinated monetary policy and a stronger dollar were sacrificed today on that very altar (again). 

We learned today that the ECB sees risks to price stability rising since the last meeting, it may require a policy tightening and the staff elevated its inflation forecast for 2008 to 3.2-3.6% from 2.6-3.2% in March (and raised the 2009 HICP forecast range from March estimate).  Moreover, Trichet said that inflation was persistent and would not likely come down until 2009 and would hold above 3% for the period ahead.  Trichet’s press briefing was more a defense over why the Bank failed to hike today which prompted the disclosure that the Bank was split over raising rates today, signaling a rate hike in July and no change in message on rates.  And pressed by the press Trichet said a modest rate hike may be required ahead – presumably July and something less than 25 bps – 17.5 bps seems reasonable.

First let’s look at growth.  Trichet was not only confident about growth and real economic fundamentals (wonder if PIGS agree – Portugal, Italy, Greece and Spain – PIGS is from FX Concepts), but the ECB staff raised the 2008 forecast range to 1.5-2.1% from 1.3-2.1% in March (though lowered the 2009 GDP estimate from March).  Get the impression the ECB thinks growth needs to be slower to check inflation or that because business conditions are so strong wage negotiations favor workers (okay index wage hikes make sense as a concern, but how much of the labor force in the 15 member EZ is working in index-linked wage world?). 

Growth in the EZ is not likely to hold up ahead with the US economy slowing…and slowing more broadly – not just housing, banking and autos but airlines, retail, restaurants and lodging are all catching up.  And US state and local governments are cutting employees rapidly.  China importing capital equipment from Germany to manufacture furniture for the US market is nothing I would bank on.  Also the edges of the Euro Zone growth story are rapidly fraying – Spain and increasingly Italy are suffering weakness on multiple fronts…suspect Greece, Portugal and Ireland are not far behind. 

And what does the current brand of inflation do mainly?  Well given it is commodity led it erodes real income for consumers and earnings for firms.  These are growth negatives unless you can export your way around a domestic economic slowdown.

But apart from ignoring risks to growth, Trichet also put a stake through the heart of coordinated monetary policy.  I think we live in a highly globalized economy where the US economy is the nucleus.  The Fed is the central bank to the world economy.  And the rest of the world’s central banks are in effect the equivalent of the national central banks in EMU.  The Fed has made it clear that rates are on hold ahead – no mas on further policy accommodation – and if anything has called for a higher dollar to address inflation pressures from commodity prices and inflation expectations while interest rate hikes are not advisable in light of weakened US banking system and headwind for growth.  To date the Fed has not just been providing a lift to US growth but to global growth – keep the US consumption engine humming keep global economic activity humming.  Bernanke’s speech Tuesday was also a call to the rest of the world’s central banks to think about pulling its share of the accommodation burden now that the Fed has paused.  Trichet and the ECB said no thank you and put ECB’s 3.6% HICP in May above larger global economic best interest.  In time it may well be the breakdown in global monetary policy coordination that causes a serious global recession.  After today I have less confidence that the ECB can play Stan to the Fed’s Ollie.  Furthermore one has to ask how much longer the EZ (EMU) will run without internal rebellion.  My bet is by the fall Italy under Berlusconi will be threatening to leave EMU unless the ECB addresses growth and the euro. 

Finally Trichet has been an advocate of a lower euro and higher dollar (and yen) for some time.  He has no business talking  the euro down period…not when the ECB is on the verge of a rate hike in the face of the greatest potential economic downturn in 70 years.  With inflation blurring ECB vision one has to ask seriously whether 1.60 is better for inflation than 1.50.  Maybe 1.70 is best now that Trichet has launched oil back above $130.

I have a problem no doubt.  My early market seasoning happened when currency accords and intervention were unfolding and central banks were moving in a coordinated fashion to address larger risks to the global economy than national self interest.  I suffer from nostalgia-bias…it won’t ever be the same despite the increased interdependence of the global economy.  Moreover, the notion of the US as a leader in global anything has been grossly devalued…some of it for political reasons and some for economic…emerging world preeminence and a good economic run for the money to date from the Euro Zone. 

So today was another one of those lessons that the past is not a reliable guide to the future.  In this every man for himself world, the downside risks are unthinkable and Trichet and ECB showed today that despite an unprecedented need for a global monetary policy response (not a global liquidity response – this has worked well) a simple rule – inflation target – trumps everything. 

Here is my forecast…the euro in time gets punished for the ECB’s single-mindedness...elevating the risk of a EZ and global recession at a time when accommodation is called for with the Fed done.   Dare I say that the 10 year anniversary of the ECB may be the high water mark for EMU…the very premise of EMU could see a serious challenge internally as weaklings in the EZ have diverging interests and the global economy shuts off external growth all the while the monetary policy makers in Europe worship daily at the inflation altar adorned with a huge graphic of <2%.

David Gilmore         


Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 10 Sep 2018
AA 08:30 GB- GDP, Trade, Output
Tue 11 Sep 2018
AA 08:30 GB- Employment Decision
A 09:00 DE- ZEW Survey
Wed 12 Sep 2018
A 12:30 US- PPI
A 14:30 US- EIA Crude
A 18:00 US- Beige Book
Thu 13 Sep 2018
A 1:30 AU- Employment
AA 11:00 GB- Bank of England Decision
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
AA 12:30 US- CPI
Fri 14 Sep 2018
A 08:30 GB- GDP
AA 12:30 US- Retail Sales
A 13:15 US- Industrial Production
AA 14:00 US- prelim University of Michigan

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105