User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Friday September 15, 2006 - 15:45:16 GMT
BHF-Bank -

Share This Story:
| | Email

FX Briefing 15 September 2006 - Inflation is slowing down significantly in euroland

• New government leader could increase political pressure on BoJ
• FOMC extends rate pause, tightening bias remains
• Inflation outlook in the eurozone is brightening up – not just temporarily

Inflation is slowing down significantly in euroland

There is a long string of political events on the agenda next week starting this Saturday when the G7 finance ministers and central bank governors meet in Singapore, and going on until Tuesday and Wednesday, the official part of the IMF and World Bank annual meeting. US Treasury Secretary Henry Paulson will visit Chin from Tuesday to Friday.

In the last few days, so much has been written and spoken on the subject of “global imbalances”, that there is little to add. It is becoming increasingly clear that politicians are very reluctant to make statements on exchange rate policy. China (and other emerging market nations in the region) are still being urged to make their exchange rates more flexible, but the Chinese government’s cautious approach is likely to be respected. Otherwise, the solution to the problem of global imbalances is seen to be in stronger domestic demand in the surplus regions (emerging Asia, commodity producers, Japan), and also Europe.

On Wednesday, the LDP is electing its new president. Shinzo Abe is widely viewed as the frontrunner and would thus also be the designated successor of prime minister Junichiro Koizumi. At present chief cabinet secretary, he is perceived as belonging to the conservative wing of the LDP. Given his views on monetary policy, there could be more political headwind to future BoJ rate rises.

There is also an FOMC meeting mid-week. The latest data more or less confirm the FOMC’s expectations that Q3 growth will be just below potential. The risks for the housing sector might indeed be seen to be more severe, but there is not likely to have been an increase in macroeconomic risks: investment activities outside residential construction seem to be strong, the increase in employment and wages plus the current decline in energy prices are supporting private consumption. High capacity utilization, the acceleration in wage cost increases and the present high inflation rates all indicate that the inflationary risks persist. Furthermore, recent comments made by Fed representatives suggest that the Fed will extend the rate hike pause with a tightening bias for a further five weeks. Its statement for the press will probably be very similar to the one issued on 8 August.

Disinflation in Euroland
While ECB representatives are still professing their determination to continue tightening monetary policy, a surprise is brewing on the data front. For if our forecast proves to be correct, the German inflation rate could plunge in September from its current level of 1.7% to 1.0% or even slightly less (!). The reason for the sharp decline is that last year’s base is very high due to the energy price peaks in September and October 2005. This effect was foreseeable. However, energy prices have been developing very favourably over the last few weeks on top of this. WTI is currently around $63/b, almost 20% below the peak in July.

Fuel prices, which had already been declining slightly in August, could have dropped further by about 7-8% in September. On the whole, the reduction due to the present energy price drop could be almost 0.3 percentage points. Furthermore, other non-energy prices have also been developing fairly moderately recently – weaker than in the same period last year. The result of all these factors is the aforementioned decline in the inflation rate in Germany.

Of course these influences can also be seen at the European level too. We thus consider it feasible that the EMU inflation rate will fall from 2.3 to 1.9% in September, below the ECB upper limit of 2%.

The spectacular declines are partly of a temporary nature. In November and December, the base effects will become less significant, and inflation will climb up again. The German VAT increase comes into effect in January and its price-driving impact will probably be evident in EMU consumer prices too.

Nevertheless, the inflation situation has improved considerably. The decline in energy prices (and other commodity prices) is dampening price pressure. If the oil price remains roughly where it is today, the ECB could for the first time revise its inflation forecast for 2007 downwards. At present, the forecast is around 2.4%; our estimate is currently just over 2% – despite the VAT increase. In this case, inflation rates could rise to 2.5% again in the first quarter of 2007, but as from Q2, they could fall below the ECB’s target again. The first forecast for 2008, to be issued by the ECB in December, could actually be below 2%.

Even if the favourable economic situation and monetary development still speak for further ECB tightening, the change in the inflation outlook makes raising interest rates in the eurozone less urgent. In our view, this enforces the possibility of the yield curve, which is currently very steep at the short end, flattening in the near future, which could in turn also weaken the euro.

Stephan Rieke +49 69 718-4114
Economics Department
+49 69 718-3642
[email protected]
Foreign Exchange Trading
[email protected]
Jörg Isselmann
+49 69 718-2695
Matthias Grabbe / Klaus Näfken
+49 69 718-2688

This 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 States.
© 2005 BHF-BANK Aktiengesellschaft
All rights reserved. Please mention source when quoting from it.


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

Tue 31 July 2018
AA JP- Bank of Japan
A 06:00 DE- Retail Sales
A 09:00 EZ- flash HICP/GDP
AA 12:30 US- Core PCE Deflator
A 14:00 US- CB Consumer Confidence
Wed 1 Aug 2018
A Final Mfg PMIs
AA 12:15 US- ADP Private Payrolls
A 15:00 US- EIA Crude
AA 18:00 US- Federal Reserve Decision
Thu 2 Aug 2018
AA 11:00 GB- Bank of England Decision
A 13:30 US- Weekly Jobless
Fri 3 Aug 2018
A Final Services PMIs
AA 12:30 US- Employment
A 12:30 US/CA- Trade

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