User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday December 22, 2008 - 13:39:23 GMT
Lloyds TSB Financial Markets -

Share This Story:
| | Email

Economics Weekly - 2008 was a year of shock and awe for the world economy; Weekly economic data preview - Fed and weak data put pressure on central banks to slash rates

Economics Weekly 22 December 2008


*The next Economics Weekly is published on 12 January 2009. We wish all our readers a Happy Christmas and a prosperous New Year*


2008 was a year of shock and awe for the world economy

2008 has been a year full of tumultuous events for financial markets, with the failure of some of the brightest names in the banking sector and wholesale government rescues being mounted for most of the rest. Low financial market volatility, a feature of the last seven years, turned into one of the highest periods of volatility ever experienced in some markets. The boom in the world economy has come to an abrupt end and now seems a distant memory. But at the start of the year, there was some optimism that while economic growth would slow, outright recession would be avoided. Now, the world economy faces the worst recession since the 1980s. Inflation was not seen as a major problem at the start of 2008, but by the end of the year deflation and disinflation were the main concern.


Economic forecasts for 2008 were almost uniformly wrong…

Consensus forecasts show that expectations for economic growth in 2008, made in December 2007, were way too optimistic. Chart a illustrates that the latest (December 2008) projection for growth this year has turned out to be sharply lower for every country included. Such was the growth momentum at the start of 2008, however, that although all of the countries in the chart are now in recession, none of them will see an outright fall in gdp this year; that will come in 2009, when all of them will see a fall in output. For the UK, economic growth is on course to turn out less than half what was the expected increase. For Japan, economic growth will turn out to be two-thirds less than predicted at the start of the year.


…economic growth, inflation, interest rates were all thrown off course…

This deterioration in the growth performance is occurring despite lower short term and long term interest rates in all of the major economies than was expected at the start of 2008. Charts c and d highlight how much interest rates, short and long term, have collapsed. But short term rates are measured using interbank quotes, and these are much higher than official benchmark lending rates due, of course, to the ongoing credit crisis. If short term rates are analysed in terms of official levels, they are in most cases at or below historic lows, because these economies were at the epicentre of the credit crisis, except Japan whose banking sector has not been as badly hit by it directly.


Despite weaker economic growth, consumer price inflation has turned out higher than forecast, see chart b. Indeed, consumer price inflation has been higher in all of the economies projected than was expected, as economic growth in the first half of 2008 turned into outright declines in output in the second half. This is testament to the ferocity of the turnaround that has occurred in the global economy in 2008 ending, in the case of the UK, 16 years of uninterrupted growth and one of the longest and strongest expansions in the world economy since the Second World War. Oil and commodity prices played a decisive role in pushing up inflation, so reducing real incomes and hence hitting economic growth. For instance, oil prices rose to a peak of $147 a barrel in July before subsiding to around $35 at present. As a result, the economic forecasting record was not great last year for anyone, but then the demise of famous companies that had survived for hundreds of years and the effective failure of the global financial system does not occur too often either.


…because of one of the worst ever financial market crisis…

The year started with fears that the credit market crisis, which had begun in Q3 2007, could spill over into price deflation and economic crisis. However, chart e shows that credit market and stock market risk perceptions, as measured by the Vix volatility index, were stable, albeit at a much higher level than in the previous 5-7 year period. But in the second half of the year with the bankruptcy of Lehman Brothers (a 150 year old firm), the rescue of all of the top US investment banks and a host of other financial market companies, as Fannie Mae and Freddy Mac also went into explicit public ownership, confidence went into a nosedive. This is shown in charts f and g, where stock markets crashed lower and the dollar fell sharply against some currencies but gained against most others. However looked at, 2008 was as fundamentally a defining moment in economic and financial markets history as any in previous generations, and it is not yet over as we enter 2009. Many of the issues and challenges posed in 2008 are persisting into 2009 - with some sort of resolution possible for some of them, one way or another - but not necessarily for all of them.



Weekly economic data preview W/c 22 December 2008


Fed and weak data put pressure on central banks to slash rates

The historic decision by the US Fed to cut interest rates to a range of zero to 0.25 percent and the commitment to keep them at exceptionally low levels for some time has raised pressure on other leading central banks to follow suit and further reduce interest rates. Following the Fed's move last week, the BoJ cut rates to just 0.1%, the Norwegian central bank slashed them 1.75% to 3% and the Danish central bank by an unexpected 0.5% to 3.75%. Recent data also suggest the economic slowdown is intensifying, while the threat of deflation continues to mount. We expect the BoE and ECB to cut interest rates by up to 1% in January, to potentially 1% and 1.5%, respectively. As the room for further cuts diminishes, we also expect more unconventional measures, such as 'quantitative easing' -directly boosting money supply, to target ongoing strains in credit markets. As expected, the calendar is relatively light over the main holiday period for key data, however the risk of important policy announcements is still quite high. Thin volumes and 'year-end' also raise the potential for volatility. The week starting 5 Jan should see trading volumes and general market activity pick up sharply, helping to underpin prices.


In the UK, we expect confirmation this week that the economy shrank by 0.5% in the third quarter of 2008, while the first view of the balance of payments data is forecast to show the current account deficit narrowed to £10.6bn in Q3, from £11bn in the second quarter. While the gdp data may be revised slightly, the recent disappointing PMI indices for manufacturing, services and construction suggest the economy may have contracted by over 1% in the final quarter for the first time since the start of the last recession in 1990. The risk of an excessive fall in the exchange rate led the BoE MPC to decide against cutting Bank rate by more than 1% earlier this month, however another sharp reduction in January may be unavoidable, taking official interest rates to the lowest on record. Despite the sharp fall in sterling over the past year, the UK's goods trade deficit has stayed close to £8bn, mainly reflecting slowing external demand. However, the current account deficit in the first half of the year was over £10bn smaller than in H1 2007, primarily reflecting a sharply higher income surplus. Nevertheless, the deficit still represented 3% of gdp in Q2 and the risk is that it widened in the third quarter, which could put further downward pressure on sterling. Next week, there are some key data published on Friday. The November lending to individuals figures are forecast to show housing market activity remained constrained and modest growth in consumer credit. The manufacturing PMI may have fallen further in December, from a survey low of 34.4 last month. The BoE decision, on Thursday, provides the highlight in the first full week of 2009, with the services PMI and manufacturing data on either side of it likely to show falling output. Producer prices data, on Friday, may show further sharp falls in December.


The focus in the US in the weeks ahead will remain on credit market developments, with discussions still ongoing with the major auto companies over the final terms of the bailout and the Fed adding to its rapidly expanding balance sheet. Data are likely to show further signs of economic weakness, with this week's personal income and spending numbers for November watched particularly closely for indications of how sharp the overall gdp contraction may be in the final quarter. Ahead of these figures, other data should confirm the economy shrank by 0.5% in Q3 and again underline the fragile state of the housing market. Next week, the consumer confidence and ISM manufacturing indices are likely to show weak outturns in December, with both potentially falling below last month's readings as general conditions have deteriorated. The December labour market report is due on 9 January. Weekly jobless claims data suggest another fall in the region of 500,000 in non-farm payrolls is likely, while the unemployment rate is forecast to edge up closer to 7%.


Recent data from the euro zone show the economic slowdown is intensifying and has added further pressure on the ECB to lower interest rates. The next regular monthly meeting is on 15 January. Data in the coming weeks will confirm the growing impact of the credit crisis on the real economy, while also highlighting the ebbing threat of inflation.

Jeavon Lolay, Senior Economist


Economic Research,
Lloyds TSB Corporate
10 Gresham Street,
London EC2V 7AE
0207 626 - 1500


Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.



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