User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday March 22, 2010 - 10:43:48 GMT
Lloyds TSB Financial Markets -

Share This Story:
| | Email

Economics Weekly - Global trade imbalances to shrink; Weekly economic data preview - Chancellor’s pre-election Budget keenly awaited

Economics Weekly - 22 March 2010


Global trade imbalances to shrink


US/China trade tensions rooted in a misunderstanding of the facts

Global trade disputes have not gone away. Even though there was significant cooperation amongst countries over the last two years to limit the effects of the recession through coordinated fiscal and monetary loosening, substantial issues around trade remain. Friction is most apparent between the US and China, especially as China fixed its exchange rate against the US dollar in 2008. Chart a illustrates that the Chinese surplus and the US deficit seem to be mirror images of each other. In this weekly, we look more closely at global imbalances, concluding that, contrary to market expectations, they are likely to continue to narrow in the years ahead and that China is playing a crucial role in that process. Recognition of this would lessen trade tensions, reducing the risk of protectionism and severe damage to all participants in the global economy that have benefited so much from its expansion in the last twenty years. However, this may not be possible at a time that political tensions seem to be rising. This would be a pity as the reality is that trade openness has enabled the largest reduction in global poverty levels and increase in wealth ever recorded.


Chinese currency fix not to blame for US deficit…

The Chinese economy did not experience even one quarter of negative growth during the recession, exacerbating perceptions of unfair trade practices in the rest of the world. However, the US has experienced its deepest downturn since the 1930’s depression. The US partly views its large US current account deficit as evidence of unfair trading practices, especially from China since that is the country it has the biggest bilateral trade deficit with and the largest economy that fixes its currency against the US dollar. However, although the latter is true - the Chinese have fixed the yuan to the dollar - is this interpretation of China's role in the US trade deficit a fair one? In reality, there appears to be little correlation between the yuan and changes in the size of the US current deficit, at least since the fix in 2008. The reduction in the US trade deficit as a share of gdp has continued as sharply as prior to the fix. Earlier action by China to appreciate its currency vis-à-vis the US may have helped this process.


..and global trade imbalances are shrinking…

Looking at table a shows that, contrary to popular belief, the US external deficit has shrunk from a peak of 5.3% of its economy in 2004 to 2.6% in 2009. The expectation is that the deficit will stabilise at this new, lower level out to 2014. It is also apparent from the table that trade surpluses do not just exist in China but also in Germany and Japan - high saving economies with ageing populations that consume relatively little from abroad but export a lot.


Forecasts show that, from a peak surplus of exports over imports of 3.7% of gdp in 2004, the Japanese surplus is expected to shrink to 1.5% of its economy by 2014. In the case of Germany, however, the surplus is expected to rise, from the 2004 level of 4.7% of gdp to 5.1% in 2014. One obvious reason why this may not attract as much US ire is because the currencies of these two economies are allowed to be determined freely by market forces whereas that of China is decided by the government. Removing this would perhaps lead to less attention been focused on unfair trading practices from China and more on other factors.


US deficit and Chinese surplus down to domestic pathologies

A change in focus would help the US itself in the long run, as the real reason for its continued deficit is not primarily the exchange rate against China but its own domestic spending and saving proclivities and productivity. Roughly speaking, US consumption is so high as a share of gdp that the extra supply required to meet the demand comes in from overseas, while China consumes too little and the extra it produces is sold overseas. These trends are shown in chart b. The chart shows that Chinese consumption is lower as a share of gdp than in the US, and this share has fallen further since 2000, despite an appreciation in the Chinese yuan. However, chart c shows that Chinese import growth has increased sharply, even though it has fallen back somewhat in the recession. By contrast, US consumer spending as a share of its gdp has remained high, despite a more competitive currency. The US import share of gdp continued to trend modestly higher since 2000, but has fallen back since the onset of recession in 2008.


China set to add more to global gdp than the US

A virtuous combination of US exports rising faster than imports and Chinese imports rising faster than exports is reducing the Chinese trade surplus and lowering the US trade deficit. That bodes well for the stability of global markets in the years ahead, if this is the focus rather than exchange rates. This is particularly likely to be the case because the rise in Chinese imports is, at the margin, adding more to global economic growth than US imports. Chart d shows how powerful an argument for open markets this is, based on the change in the cumulative total of US and Chinese imports in three periods: 2000-2004, 2005-2009 and, looking ahead, 2010-2014.


Chinese imports have roughly added the same as the US to global imports in the five years to 2009, after roughly adding half as much in the previous five years. In the next five years, China is expected to add one-quarter more to global imports than the US. Whilst the US will remain the single biggest import market in value terms, the incremental increase will be coming from China in the next five years. This means that it is in the interests of the US to retain open markets, as it too will benefit from this trend. It is one of the reasons why its trade deficit will stabilise as a share of gdp. This is a powerful argument for the US and China to avoid being drawn into self-defeating spats about the exchange rate and to keep global trade open.

Trevor Williams, Chief Economist, Corporate Markets


Weekly economic data preview - 22 March 2010


Chancellor’s pre-election Budget keenly awaited


􀂄 In the UK, this week sees a busy economic data calendar featuring the Chancellor’s Budget, CPI and retail sales. In Wednesday’s Budget all eyes will be on Mr. Darling’s projections for public sector net borrowing where the Pre-Budget Report forecast for 2009/10 of £177.6bn may be undershot by an appreciable margin. Ahead of an election, it may be that savings are directed towards various initiatives, perhaps measures aimed at helping the long-term unemployed. But as in other countries, fiscal consolidation is still the name of the game. Taken overall, we look for the Budget to be mildly expansionary. Meanwhile, our forecast for February’s annual CPI rate stands at 3.1%. Notable features regarding February’s annual CPI rate include downward pressure from food prices, which registered a particularly sharp month-on-month increase (of 1.7%) in February last year. In addition, February’s RPI data will be the first to incorporate a new measure of mortgage interest payments. The latter is no longer based just on the standard variable rate (SVR), but on a weighted average of mortgage rates including fixed, tracker and discount as well as SVR. While this has the longer-term benefit of reducing both RPI volatility and the differential between RPI and CPI, in practice we think the methodology change will have little meaningful impact on next week’s RPI data. Meanwhile, we look for retail sales excluding petrol to recover to +0.6% month-on-month in February, following a sharp weather-related decline in January.


􀂄 The statement accompanying last week’s US Federal Reserve monetary policy decision made a passing reference to the ongoing fragility of the housing market. At one level, the Fed has not extended its purchases of agency mortgage backed securities (MBS) and debt, which are due to expire at the end of this month. At another, the regular dataflow - new and existing home sales data are published this week - has yet to show convincing signs of a turnaround. On existing home sales, we look for an outturn of 4.95mn units following sharp declines in both December and January as buyers accelerated purchases to take advantage of a tax break originally due to expire at the end of November (subsequently extended). On new home sales, we look for a reading of 310,000 units in February. Other key US economic data published this week include the third estimate of Q4 GDP (where we look for an unrevised outturn of 5.9% annualized growth) and durable goods orders for February. Business spending on equipment and software has increased recently, although a still uncertain economic climate suggests that overall fixed investment is not yet poised to rebound strongly. Excluding transportation, our durable goods orders forecast stands at +0.3% month-on-month.


􀂄 Euro-zone government bond markets appear to have gone lukewarm on the recently arranged emergency financial support facility for Greece. Markets are concerned that the cost of refinancing some €55bn of debt this year may prove too much and that the emergency facility agreed among euro-zone finance ministers will not be a backstop, but a reality. This week’s euro-zone economic data feature a range of important releases, mainly forward-looking business surveys. Wednesday sees the publication of March’s German Ifo survey, where we look for the business climate index to register 95.7 compared with a previous reading of 95.2. In particular, we look for the current conditions index to have improved significantly during the month reflecting measures to alleviate difficulties in Greece. But as noted above, these problems may yet resurface. Elsewhere, preliminary euro-zone purchasing managers’ survey data for March are also released on Wednesday, where we envisage an improvement to 55.0 from 54.2 previously for manufacturing. Finally, euro-zone M3 money supply data for February are published, where the fall in lending to non-financial corporations continues, albeit alongside a modest recovery in mortgage lending (see chart).

Mark Miller, Global Macroeconomist


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