User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday August 17, 2009 - 09:40:35 GMT
Lloyds TSB Financial Markets - www.lloydstsb.com/corporatemarkets

Share This Story:
| | Email

Economics Weekly - Economic activity: levelling off or growing? Weekly economic data preview - UK inflation to fall further, while US confidence and housing data are due

Economics Weekly - 17 August 2009

 

Economic activity: levelling off or growing?

It is clear that a remarkable economic recovery is underway in Asia, led by China and India, but is the

same true of the developed economies? Recent economic figures for Germany and France have prompted many commentators to predict that recovery has started. But is this true or is it more a levelling off of activity? Moreover, not only have financial markets been expecting recovery, as shown by the strong rise in equities in recent months, but they have been looking for it to start in Europe ahead of the US. Further, the expectation was that, within Europe, the UK would be the first out of recession. Currency markets in particular have been marking down the US dollar relative to the pound, the euro and the yen.

 

Developed countries gdp may have stopped falling...

What are we to make of these perceptions in the context of the gdp figures for Q2 that have just been released? The analysis below suggests that output may have stopped falling in the developed economies but that recovery is still some way off. And despite perceptions, the US looks like being the first economy to get closer to the output level reached prior to the start of the recession, based on consensus forecasts, in the next two years. Figures for Q2 2009 show that economic growth in the Asian emerging markets as a whole was about 10% annualised. Although this disguises weakness in some of the smaller economies in the region, the Asian economies that have reported gdp for Q2 all showed a strong rise. These include, China, up 15% annualised on Q1, Singapore, up 21%, South Korea, up 10% and Indonesia up by 5%. Overall, the Asian economies are showing signs of a stronger recovery than evident in the developed economies so far. The expectation in the August Asia Pacific Consensus Forecast is for Asian growth excluding, Australia, Japan and New Zealand, to be 4.6% this year, accelerating to 7.8% in 2010. Consensus Forecasts for the advanced economies is for a fall of 4.1% in 2009 and a rise of just 1.2% in 2010. But recent economic figures for the eurozone in Q2, and within it, Germany and France, suggest that perhaps recovery is now underway in the developed economies as well. The facts are that eurozone gdp dropped by 0.1% in Q2 (expectations were for a fall of 0.4%) but economic growth in both Germany and France was 0.3%. However, do these figures mark the start of economic recovery or are they just a sign that perhaps the worst of the falls in gdp are over?

 

...but an economic recovery still seems some way off...

Focusing on the developed economies, chart a shows that the falls in gdp have been very sharp, especially in Japan and the eurozone and, within the latter, Germany. On average, gdp has declined for 5 quarters so far in this recession. Although the size of the declines has diminished, this does not yet look like recovery. And chart b illustrates why this is. Manufacturing output, which has led the downturn, is still well off the level reached before the recession started. Japan has showed the biggest fall in manufacturing activity, followed by the eurozone, the US and the UK.

 

These declines in the level of manufacturing activity reflect the massive reduction in stock levels that has occurred in the developed economies, possibly the worst in 50 years. But the rapid pace of liquidation appears to be easing and stocks are now therefore likely to add to gdp in the next quarter or two, even if the drawdown does not end completely. However, absent a recovery in consumer

demand, in company investment or in government spending, any boost to gdp from this source is likely to prove temporary. In terms of the peak to trough fall in gdp, see chart c, Japan has seen the biggest drop, nearly 9% so far, followed by Germany, the eurozone, the US and France. These declines are worse than those recorded during the 1980s or 1990s recessions, in terms of gdp falling below potential growth. Our analysis suggests that the output gaps that have opened, see chart d, are also larger than in the 1980s and 1990s downturns. This means continued downward pressure on price inflation and the persistence of low interest rates and non standard monetary policy measures in those economies most affected by the recession for longer to ensure recovery occurs.

 

...a number of important factors will prevent a rapid recovery...

The factors that stand in the way of a rapid economic recovery in developed countries are captured by the rise in unemployment depicted in chart e. Although the pace of job losses will slow as economic activity levels off, unemployment will still rise as long as growth remains below potential. This will restrain consumer spending, and raise saving rates, already compounded by high debt levels. With consumer demand weak and residential housing markets likely to remain under intense pressure for some time, companies are unlikely to expand investment spending, especially in a more constrained credit environment. This means that economic growth will take longer to return to its previous peak. We have estimated how long that could be for some developed economies, using consensus estimates of gdp levels up to the end of 2010. It shows that only the US of the major economies will return close to its 2008 gdp level by that time.

 

...leading to important implications for financial markets

The implication of this analysis is that the recovery will be long and protracted in the developed economies, and the better performance of the Asian emerging market economies cannot be quickly emulated. Further, the latter will lead the world economic recovery. Of the major economies, the US seems most likely to recover to its pre-recession level first. But this is not the trend evident in financial markets, with the dollar currently being sold relative to the euro, yen and sterling. That could therefore reverse, unless supported by improved economic performance of the other areas. In addition, financial markets may be expecting too much monetary tightening over the next two years. This implies that inflation expectations are too high and that government bond yields couldstay lower for longer or fall from current levels. But the rise in equity markets, if led by the emerging markets, seems more solidly based. However, the current commodity price trends might not be sustained for much longer if demand from the developed economies does not come through to sustain the rise in prices that has been seen in recent months.

Trevor Williams, Chief Economist, Corporate Markets

 

Weekly economic data preview - 17 August 2009

 

UK inflation to fall further, while US confidence and housing data are due

Last week’s Bank of England Inflation Report reaffirmed the view that inflation is likely to fall further in the near term, despite improvements in short-term indicators of growth. Moreover, the Bank’s forecasts show annual CPI inflation will remain below target in the medium term if interest rates were to move higher. This week sees the release of UK July CPI inflation, which is expected to have fallen further below the 2% target and RPI further into negative territory. UK official retail sales and the CBI industrial trends are also due. In the US, housing and business confidence indicators, including housing starts and the Philadelphia Fed business survey, dominate proceedings. Fed Chairman Bernanke is scheduled to speak at Jackson Hole at the end of the week. In the eurozone, last week’s unexpectedly positive Q2 growth numbers for Germany and France will be followed this week by advance eurozone PMI and German ZEW surveys. In Japan, the= economy in Q2 is expected to have returned to growth, but the sustainability of recovery there is not assured.

 

􀂄 UK annual CPI inflation fell below the 2% target only last month for the first time since September 2007. Near term, we expect it to decline further, to 1.5% in July and potentially below 1% in the coming months. Hence, inflationary pressures will remain weak and it will take several years of very strong growth to eliminate the significant output gap that has opened up. Anecdotal evidence for July retail sales has been mixed, but we think the official figures may reverse some of the 1.2% monthly rise in June. The CBI industrial trends survey is also due and has, in recent months, pointed a less positive outlook for short-term growth than the PMI survey. We expect the CBI survey’s total orders balance to rise to -50 in August from -59, still a very weak level for this survey. The minutes of the August 5/6 MPC meeting will be published and could show a split vote in favour of the unexpected £50bn increase in the Bank of England’s asset purchase programme.

 

􀂄 The German and French economies expanded in Q2, contrary to expectations, following four consecutive quarters of sharply negative growth. Eurozone GDP still fell by 0.1% on the quarter, however, dragged lower by contractions in Italy, Spain and the Netherlands. The advance PMI surveys for manufacturing and services are expected to show further improvements in August, but they are expected to remain below the key 50 ‘no change’ level in Germany, France and the eurozone. This suggests that we should be cautious about underlying economic prospects, despite the surprisingly strong Q2 GDP numbers released last week. We have pencilled in a rise to 47.5 from 46.3 for eurozone manufacturing PMI and a rise to 46.5 from 45.7 for services PMI. The German ZEW survey of investor confidence fell unexpectedly last month to 39.5, but the renewed upturn in risk appetite in the past month means that it could increase to 50.

 

􀂄 US business confidence surveys have improved in recent months, raising hopes that the economy could return to growth in Q3. Housing indicators have also been stronger. However, the cautious tone regarding economic prospects in the FOMC statement last week and unexpected declines in retail sales and consumer confidence reaffirm our view that the Fed is not likely to tighten policy anytime soon. The Philadelphia Fed business survey fell slightly last month, but the trend has remained higher. An improvement in this survey in August is expected. This publication is preceded by the Empire manufacturing survey at the start of the week, which again has trended higher in recent months. Moreover, the Conference Board’s index of leading economic indicators is expected to show a fourth consecutive month-on-month increase. Housing market indicators have also improved lately. Housing starts may rise to 600k, the highest this year, while the NAHB homebuilders confidence index is also expected to rise. Fed Chairman Bernanke will round off the week by speaking at the Jackson Hole Conference on Friday.

 

􀂄 Japanese Q2 GDP is expected to rise for the first time in five quarters. We see a quarterly rise of 0.5% (or 2.0% annualised). The positive outturn is likely to reflect recovery in export markets, but its sustainability remains open to question, given weak indicators of domestic demand. Moreover, even with stronger Q2 growth, the level of output will be significantly lower than the peak, raising the risk of continued protracted deflation in Japan.

Hann-Ju Ho, Senior Sector Economist

 

Economic Research,
Lloyds TSB Corporate
Markets,
10 Gresham Street,
London EC2V 7AE
,
Switchboard:
0207 626 - 1500
www.lloydstsb.com/corporatemarkets

 

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."



Elevate Your Trading With The Amazing Trader!

The Amazing Trader includes:
  • Actionable trading levels delivered to YOUR charts in real-time.
  • Live trading strategy sessions.
  • Market Updates with Trading Tools.

Register To Test Your Amazing Trader


Trading Ideas for 18 October 2017

Register for the Amazing Trader

1.

Amazing Trader EVENT RISK Calendar:

Wed 18 Oct
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales

Forex Trading Outlook


Trading Opportunities


  • POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.

  • POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.

  • POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.



  • POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.

  • POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.



  • POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.


  • POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.


  • POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.



John M. Bland, MBA
co-founding Partner, Global-View.com

EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




TRADER ADVOCACY ARTICLES

Trader's Advocate Articles..

pic

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 Global-View.com.

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

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.

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