FX Briefing - US economy: velocity of fall diminishing
FX Briefing 17
sector plunge seems to be slowing down
Â·US residential construction is creeping sideways â€“ at
Â·IMF warns of
long recession and slow recovery
US economy: velocity of fall
Over the last few weeks, the euro has weakened somewhat
in relation to most major currencies. EUR-USD is currently around 1.31, a good 2 per cent
lower than a fortnight ago. Similarly, EURJPY has fallen to about 130. USD-JPY
has remained virtually unchanged at just under 100.
However, contrary to what one might have expected, given
the experiences of the last few
months, equity markets actually brightened up a bit.
This was because earnings reports, particularly from the banking sector, turned
out to be remarkably positive on the whole. Furthermore, numerous US politicians, from President Barack Obama and his
advisor Lawrence Summers to Fed chairman Ben Bernanke tried to raise
confidence. They all saw the first signs of stabilization in the US.
We should not get our hopes up too high, however. About
all that can be deduced from the
data, is that the velocity of the fall could be
diminishing. Industrial production fell to its lowest
level in 10 years in March; the decline in the first quarter
was 5.4% quarter-on-quarter â€“ much steeper than in Q4. In the last quarter, the
ISM index rose modestly, but its current level of 36.3 (the neutral level is
50) is still signalling an ongoing sharp contraction. The regional surveys of
the Federal Reserve Banks of New York and Philadelphia, which were published this week, went up slightly more in April, but these indicators too are
continuing to show contraction in the manufacturing sector.
After increasing the previous month, the number of
housing starts and building permits dropped in March, almost reaching Januaryâ€™s
record low. With a bit of good will, this could be interpreted as â€śbottoming
outâ€ť. But building activity is still at a catastrophically low level. At about
500,000, the number of housing starts was only a third of the
average for the last 50 years; nominal (!) expenditure is currently at the same level as at the
beginning of 1998. The situation is not likely to change much in the foreseeable future either. The
massive supply overhang both for new and existing homes is making it less attractive to build
new ones. And rising unemployment will probably also play a part in keeping the supply of houses
up and demand down.
In the first quarter as a whole, private consumption seems
to have remained relatively stable; it
is possible that the increase in unemployment was
initially balanced out by the purchasing power effect of lower energy prices.
However, after having risen in the two previous months, retail sales fell again
quite significantly by 1.1% in March. People are putting larger purchases of durable
consumer goods on hold.
The International Monetary Fund published two chapters
of the new World Economic Outlook in advance this week containing an interesting analysis
on how long the global recession could
last and what the upswing could look like. The IMF
economists come to the conclusion that there is little possibility of a
This is because, unlike in earlier recessions, no impetus
can be expected from US domestic demand; in the recession at the beginning of
the 1980s, for example, there was considerable pentup demand for property and
durable consumer goods due to the high interest rate policy. When interest
rates began to fall, people started spending, thus triggering a powerful spurt
of growth. Things are quite different this time: consumers are deeply in debt (the
monetary fund describes the situation as â€śoverleveragedâ€ť), and their first priority
will be to reduce their debts. They will therefore probably hold back on
Another factor which is different from earlier recessions
is the global dimension of the downswing. As a result, there is not much scope
for countries to generate a recovery by means of exports. Therefore, the
International Monetary Fund is expecting the recession to be long and the
recovery to be sluggish.
We share the IMFâ€™s view. The job losses, credit defaults
and insolvencies all pose significant
economic risks in our opinion. The fact that the downswing
has slowed down is currently being hailed as a positive sign, but it could drag
on for several quarters and cause great damage. At present, capacity
utilization is so low that â€śstabilizing tendenciesâ€ť are no longer enough to
sustain companies and jobs.
In this environment, it is hard to make exchange rate
predictions. In the short term, we are expecting the dollar to strengthen,
primarily due to safe haven considerations and hopes of the more aggressive US economic policy succeeding (and vice versa, a
critical assessment of the economic policy measures in the eurozone). In the
longer term, however, we see a danger of the US discovering the dollar exchange rate as an additional
policy instrument. A depreciation of the dollar could be justified from an
economical point of view by the balance of payment situation, but it would
exacerbate the problem, particularly in Europe.
Rieke +49 69 718-4114
Grabbe / Klaus NĂ¤fken
report has been prepared by BHF-BANK Aktiengesellschaft on behalf of itself and
its affiliated companies (together "BHF-BANK Group") solely for the
information of its clients. The information and opinions in this document are
based on sources believed to be reliable and acting in good faith, but no
representation or warranty, express or implied, is made by any member of the
BHF-BANK Group as to their accuracy, completeness or correctness. Opinions and
recommendations are given in good faith but without legal responsibility and
are subject to change without notice. The information does not constitute
advice or personal recommendation, for which the duty of suitability would be
owed, but may facilitate your own investment decision. Moreover, you should
seek your own advice as to the suitability of an investment matter mentioned
herein. Investors are reminded that the price of securities and the income from
them can go down as well as up and that the past performance of an investment
or a market is not necessarily indicative for future results. This document is
for information purposes only. Descriptions of any company or companies or
their securities mentioned herein are not intended to be complete, and this
document is not, and should not be construed as, an offer to sell or solicitation
of any offer to buy the securities mentioned in it. BHF-BANK Group and its
officers and employees may have a long or short position or engage in
transactions in any of the securities mentioned in this document, or in any
related securities. This publication must not be distributed in the United
rights reserved. Please mention source when quoting from it.
Forex Trading News
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
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.
Tue 19 June 2018 A 12:30 US- House Permits/Starts Wed 20 June 2018 A 14:00 US- Existing Homes Sales A 14:30 US- EIA Crude Thu 21 June 2018 AA 11:00 GB- Bank of England Decision A 12:30 US- Weekly Jobless Fri 22 June 2018 AFlash PMIs
John M. Bland, MBA co-founding Partner, Global-View.com
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.
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.
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.
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.
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 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 Global-View.com.
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 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.
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.
Global-View.com 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 Global-View.com. 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.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.