User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Monday February 4, 2013 - 17:27:14 GMT
Foreign Exchange Analytics -

Share This Story:
| | Email

Post Tail Risk World Watch Balance Sheet Growth Race, ECB losing and EUR losing FX War

Post Tail Risk World Watch Balance Sheet Growth Race, ECB losing and EUR losing FX War


The Euro Zone crisis may not have fully ended (hints of risk in Spanish bond yields in the last few days), but it has been successfully contained. As such the key fuel for a risk on risk off narrative that has been the dominate feature of trading in all asset classes since before the failure of Lehman is no longer in the driver’s seat.


But that does not mean old fashion fundamentals are now steering markets, especially in DM (developed markets) FX – buy currencies where fundamentals are strong and sell them where they are weak.


While we may get there eventually, for the foreseeable future the path ahead is surely the central bank balance sheet race. With the BOJ and Fed in expansion mode, the BOE on hold and the ECB in shrinking mode (hence the run up in Euribor rates) the ECB is winning and the euro is losing the FX war, today’s correction vs USD notwithstanding (off 14-month high vs USD hit Friday).


Simply put the BOJ is leading the balance sheet growth race hands down – growth as share of GDP (see attached chart from Thomson Reuters) – and the yen is the weakest DM currency, easily winning the DM FX war. Prime Minister Abe has succeeded in driving the BOJ into a heavy lifting QE-role to achieve a 2% CPI target. While the BOJ is showing some caution on when to begin to hit the QE levers hard, there is sure to be an even greater urgency to monetize when the new BOJ Governor takes over for outgoing Governor Shirakawa in April (Abe selects the BOJ Governor and also names two Deputy Governors in March to replace retiring officials).


The Fed is not far behind in the footrace to grow the balance sheet and as last week’s FOMC meeting showed, there is nothing on the horizon to suggest an early winding up of QE expansion. If anything the stumbling in Q4 GDP, observation by the FOMC the economy has paused (albeit temporarily behind government spending reflecting mainly Pentagon preparations for sequestration – something I doubt is allowed to occur as Congress and White House hatch a last minute deal to avoid the pain. Still the success of the policy response by the Fed is now measured in unemployment rate, not inflation, not GDP and certainly not housing and auto demand. On reducing unemployment, Fed policy has at most averted a much higher rate (counterfactual) but has failed at seriously reducing the ranks of the unemployed. While FOMC may seem to be split over when to wrap up QE (costs > benefits from hawks and costs < benefits from Doves) the reality is the FOMC reflects the Chairman’s view and is sufficiently stacked with Bernanke believers (he invented QE) to press on with the policy. Bottom line the USD should weaken more against DM FX ex-JPY.


The BOE is on hold regarding QE and with a leadership transition underway the notion that Governor King and the MPC would get aggressive again with QE seems unlikely – think the consensus here is that more is not necessarily low cost option against weak growth…much closer belief that QE has diminishing marginal returns. That said the tool is not in danger of being retired and even incoming BOE Governor Carney made it clear in Davos last month that central banks (engaged in QE) are not at the end of the rope on easing – can do more if needed. So GBP gets mixed score in DM FX war – up versus USD and JPY and down versus EUR.


Finally the ECB has made it clear with its early (weekly) window for repaying 3-year LTRO’s (low fixed rate loans to banks) that exiting unconventional (reducing its balance sheet) is the desired course for its “technical” support for the banking system. It just so happens the ECB at the January meeting dropped any reference to a rate cut which at the December meeting was supported by a majority of members on the Governing Council. So the EUR is winning the balance sheet expansion race and losing the DM FX war with a rise in the EUR.


Given the vulnerability of the EZ economy and serious depressionary trends in places like Spain, Greece, and Portugal, recessionary trends in Italy and France, one has to question whether the ECB confused containing tail risk in the EZ with achieving a sustainable growth trajectory in a period of radical fiscal adjustment across the EZ.. So far the rise in the EUR has been greeted with a degree of official pride – sign that the crisis has been contained if not defeated. But with a German-led EZ growth model where the export sector relies on an undervalued EUR (in German terms), the rise in the currency is not without limit. Weak fundamentals matter and should see some shift in ECB focus from the crisis or tail risk to the business cycle risk. But that I do not see this Thursday at the next GC meeting. For the time being it is safe to buy EUR on clear front runner in the central bank balance sheet race.


Finally balance sheet growth is not limited to DM central banks. In the EM world central banks are adding FX reserves and have been in a fairly aggressive fashion since the millennium. And more interestingly in recent months EM central banks have become more agitated by the DM FX war and falling USD which naturally prompts activist FX policy including intervention. This is a balance sheet bloater just as QE is with one exception. In theory FX intervention by EM central banks involves sterilization – offsetting money market operations so the money stock is unchanged (otherwise it would be de facto QE). So in this world of balance sheet expansion – QE once removed race contestants should not be overlooked as engaging in the currency war…it is just not nearly as powerful as monetizing which the DM world has embraced.


David Gilmore





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.

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Mon 12 Nov 2018
AA CA/US Holiday
Tue 13 Nov 2018
AA 09:30 GB- Employment
A 09:00 DE- ZEW Survey
Wed 14 Nov 2018
AA 09:30 GB- CPI
AA 09:30 EZ- GDP
A 14:30 US- EIA Crude
Thu 15 Nov 2018
A 01:30 AU- Employment
AA 09:30 GB- Retail Sales
A 12:30 US- Weekly Jobless
Fri 16 Nov 2018
AA 10:00 EZ- Final HICP
A 14:15 US- Ind Prod/Cap Util

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