User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday July 27, 2009 - 10:45:52 GMT
Lloyds TSB Financial Markets -

Share This Story:
| | Email

Economics Weekly - Real economy still not seeing money flow freely; Weekly economic data preview - Markets to be tested by heavy week of US data & bond issuance

Economics Weekly - 27 July 2009


Real economy still not seeing money flow freely


Despite unprecedented injections of liquidity, monetary growth is still slowing

Since the global financial crisis erupted, central banks around the world have pumped billions into stabilising financial markets. To a large extent this has worked, in terms of currency volatility, money market interest rate spreads, equity and bond markets, there has been a marked improvement. Indeed, the evidence is that investment banks have been restored to health, if burgeoning profits in Q1 and Q2 for those involved in financial market instrument and activity (i.e., advising commercial companies on issuing debt and equity finance, betting on spreads and yields etc) are anything to go by.


There remains evidence that those financial institutions that are less involved in money market activities, in other words facing off to the real economy - in terms of consumer debt finance, credit cards, mortgages and company finance - are not doing so well. Part of the reason appears to be that money is simply not flowing to these areas of the economy. Undoubtedly, some of this is in turn related to a desire by commercial firms and households to raise their saving rate and to pay down debt. But are there other reasons?


What has happening to liquidity?

In the Organisation for Economic Corporation and Development (OECD) area, money supply growth is slowing fast, see chart a. Annual money growth is currently around 7%, down from about 9% in 2008, and likely to decelerate further based on latest trends. This is despite a huge expansion in liquidity by central banks, see chart b. Indexing the size of each central bank’s balance sheets to 100 in January 2007, the Bank of England leads the way with 270 followed by the US Federal Reserve at around 230. The European Central Bank (ECB) has risen to 170 while the Bank of Japan scores slightly less than 100. Overall, excluding Japan, this is a considerable easing of monetary policy by any measure.


Chart c shows the total stabilisation costs around the world so far in the financial crisis, as estimated by the International Monetary Fund (IMF) as a share of each country’s annual economic output. Costs are highest in Ireland, closely followed by the UK and US. Well behind in spending to stabilize the financial system are Japan, Germany, France and Spain. It could be because these countries are pumping less into their economies, so OECD money supply is weakening. However, it could also be argued that the reason why they are spending less is simply that their economies are less directly affected by the financial crisis, though no less by the economic crisis.


Borrowing by households in the top four developed economies is decelerating rapidly…

Charts d, f, g and h reveal what is happening to detailed lending flows in the biggest four developed economies. A disaggregated comparison of trends in bank lending for these countries reveals that lending to non-financial corporations and households has decelerated everywhere apart from Japan. However, there is an anomaly regarding lending to other financial companies where the UK trends are strongly positive but the US, Japanese and EU trends are negative. This is probably attributed to the severity of the securitisation crisis in the UK, accounted for by the large amount of wholesale funding that went on by off-balance sheet vehicles that now require refinancing. This refinancing shows up as increased lending but means little directly for the real economy. What does matter for economic growth is the trend of borrowing by households and companies because this will directly translate into decisions around consumer spending and investment.


In the UK, companies are repaying debt and consumer borrowing growth is easing fast and likely to be in a debt repayment situation if the current momentum persists. In the US and Germany, companies are still borrowing but households are repaying debt. This may partly explain why commercial bank reserves at central banks in the US, EU and UK are rising. It is possible that it is not just that they are hoarding liquidity but that borrowers do not want loans as much as they did.


…suggesting weak economic growth and low inflation could persist for some time

These trends suggest that economic growth is not on the verge of a strong recovery. They also imply that interest rates will stay low for a considerable period of time, and no tightening is in the offing. With output still falling, inflation is not a threat and so there is simply no reason why interest rates cannot remain low. Also, quantitative easing, being implemented most aggressively in the US, UK and Euro area, is another policy tool that seems appropriate. But despite its expansion in recent months, there still appears to be a deceleration underway in money supply growth in the OECD area and in the big four developed economies.

Trevor Williams, Chief Economist, Corporate Markets



Weekly economic data preview - 27 July 2009


Markets to be tested by heavy week of US data & bond issuance

With many of the major equity indices hitting new highs for the year, it seems optimism abounds about prospects for global recovery. The improvement in risk sentiment and the associated bounce in equities have been impressive - driven higher by better-than-expected US earnings results, improved economic data and growing hopes that a recovery in the global economy is nigh. Just as equity markets are breaking to new highs, G-10 bond yields are shifting higher as dealers speculate that recovery may well bring forward possible interest rate rises and a reversal of quantitative easing. But, as last week’s weaker-than-expected UK Q2 GDP figures highlight, it is still too early to be confident that a fullblown and self-sustaining improvement in growth is at hand either in the UK or, for that matter, elsewhere. This week’s slew of economic data, particularly in the US, should cast more light on the debate. Amongst the main releases in the US are Q2 GDP, along with the Chicago PMI, consumer confidence, house prices and new home sales surveys. Bernanke and other Fed members will also be speaking and the quarterly refunding will get underway. Elsewhere, in the UK the calendar is sparse, although money supply, inflation, unemployment and various sentiment indicators are due in the Eurozone. We expect the general tone of this week’s data to support the recent signs of improvement. It remains to be seen, however, whether the outturns will be sufficient to maintain the bullish equity market momentum as we head into August. Short of very strong numbers, we doubt it.


􀂄 It is difficult to single out which of this week’s US economic releases is likely to attract the most attention. The advanced estimate of Q2 GDP, however, is probably the front runner as the market seeks confirmation from the broadest measure of US economic activity that conditions are improving. After the massive 5.5% annualised drop in Q1, the pace of decline in GDP is expected to have slowed to 1.5% in Q2. While consumer spending and investment (both business and residential) are forecast to have dropped further, the overall outturn should have improved, courtesy of a much reduced pace of destocking and a pick-up in net exports. Improvements are also anticipated in this week’s Chicago PMI, new home sales and Case-Shiller house price reports. Recent indicators suggest the US housing market has bottomed. Still, given the overhang of unsold homes it will be a long time before the recent improvement in housing starts and home sales translate into a sustained recovery in house prices. Although the pace of decline may have slowed, this week’s Case-Shiller house price report is expected to show that house prices still dropped 17% in the year to end May. Most of this week’s reports are likely to post an improvement, but the latest durable goods orders and weekly jobless claims figures are likely to be exceptions. Durable goods orders are forecast to have fallen in June, reflecting renewed weakness in aircraft orders; jobless claims, meanwhile, are expected to have risen as the seasonal distortions associated with the July retoolings in the auto sector continue to unwind. Apart from the economic data, US fixed income markets also have to contend with a resumption of government supply. A total of $109bn of 2-yr, 5-yr and 7-yr Treasuries are due to be auctioned, along with a further $6bn of 20-yr index-linked stock. The busy data schedule coupled with the heavy supply could prove a difficult test for US bond markets, particularly if Bernanke alludes to signs of recovery when he addresses a town-hall-style session at the Kansas City Federal Reserve (televised in three parts on Mon, Tues & Weds).


􀂄 In Europe, the data calendar is dominated by economic releases on the continent. The main release will be the flash estimate of the July Eurozone CPI due on Friday. The annual rate of Eurozone inflation is forecast to have dropped from -0.1% in June to -0.4% this month - taking it further into deflationary territory. In the same vein, Eurozone M3 money supply growth is forecast to have weakened further in June, reflecting the continued tightness of bank lending conditions - a finding likely to be echoed in the ECB’s Bank Lending survey on Wednesday. Nevertheless, given the pick-up in some of the recent confidence surveys, the European Commission business and consumer sentiment reports due this week hold out the prospect of some improvement. Finally, in the UK, focus is likely to be limited to the July CBI distributive trades’ survey and the June mortgage approvals and net consumer credit figures in what is otherwise a quiet week for UK economic data.

Adam Chester, Senior UK 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