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Blog / 29 January 2013 / Nordine Naam, strategist at Natixis
2013 will be a year of transition, as central banks continue to compensate for austerity measures in most leading economies.
For instance, the Federal Reserve will continue to pursue an ultra-accommodating quantitative policy so long as the unemployment rate stays above 6.5% and inflation is less than 2.5%. Meanwhile, the European Central Bank is standing ready to activate outright monetary transactions (OMT) if a country seeks aid, the Bank of Japan is expected to ramp up securities purchases, as could the Bank of England if necessary, and the Swiss National Bank will continue to defend its EUR/CHF floor rate through interventions in the foreign exchange market.
In terms of global trends, 2013 will see relatively weak global growth, as the euro zone dips back into recession and the US experiences weaker growth – trends that offset the slightly stronger growth expected in some Asian and Latin American countries. Imbalances in the global economy should continue to normalise in regards to current account balances, but given the weak level of activity in the US and the euro zone, the big challenge for emerging countries will be to push through structural reforms to bolster domestic demand. (more…)
September 2012 / 10 September 2012 / Steve Shaw, Editor, FX-MM
FX-MM’s monthly look at the economic issues affecting sentiment in global markets and their implications for the major currencies.
It was never likely that the global economic crisis was going to be resolved over the course of two Northern Hemisphere summer months, but there have been some signs of progress of late, particularly in the U.S., where a number of key economic indicators are improving.
The risk of a eurozone break-up appears to have receded somewhat, but it has not gone away, and the situation in Greece is likely to return soon to centre stage. A crucial report on the state of Greece’s finances is due to be delivered in late September by the “troika” supervising the country’s fulfilment of the bailout conditions.
While many members of the single currency are still not through the worst of the crisis, most now fully understand the magnitude of task they face in restoring sustained economic growth and are making painful, but necessary, adjustments. (more…)
April 2012 / 5 April 2012 /
FX-MM’s monthly look at the issues affecting sentiment in global markets and their implications for the major currencies.
A series of key economic and financial indicators coming out of the U.S. in recent weeks, particularly those on employment, have been surprisingly positive, although for the moment the relative strength of the U.S. economic recovery makes it something of an outlier. There are strong headwinds being encountered elsewhere – rising oil prices on the back of tensions with Iran, a tough period of austerity in the eurozone and a slowing economy in China. (more…)
March 2012 / 9 March 2012 / Steve Shaw, Editor, FX-MM
FX-MM’s monthly look at the issues affecting sentiment in global markets and the implications of
these for the major currencies.
As we move through the first quarter of 2012, the focus is still very much on the fragility of the global economic recovery. There are both positive and negative signs coming from many of the major economies around the world. There have been some more encouraging economic figures posted by the U.S., the UK and Japan, amongst others, and the eurozone seems to be inching ever closer towards getting the necessary agreements in place which could eventually see its sovereign debt crisis successfully resolved.
Much depends on the larger Western economies and Japan returning to sustained economic growth, but the levels of growth being seen at the moment do not seem to be sufficient for a speedy recovery. The U.S., which is usually the major driver of the world economy, may not bounce back to pre-crisis growth levels for several years, especially when one considers the big spending cuts that will be required if the country is to reduce its deficit. (more…)
February 2012 / 3 February 2012 /
FX-MM’s monthly look at the major currencies and the underlying issues which are affecting sentiment in global markets.
A New Year usually brings a renewed sense of optimism, but 2012 seems to have started off with much the same underlying market sentiment that we saw through – out 2011 – continuing troubles in the eurozone and no shortage of negative headlines about the economy, the debt crisis and the inadequacy of the solutions being put forward by European leaders to save the day.
Look more closely though and there have been some more positive signs of late. No doubt investors will have been delighted with the good results from the debt auctions in Spain and Italy, which exceeded expectations as they managed to sell more government debt than originally anticipated – Spain almost doubled its initial offering. Both countries saw their bond yields come down and Italy’s yields dropped to 1.64% and 2.75% for six and twelve month bonds respectively. (more…)
December 2011 / January 2012 / 5 January 2012 / FX-MM
FX-MM’s monthly look at currencies and the underlying economic issues which are affecting sentiment in global markets.
The Eurozone debt crisis has continued to intensify as a result of the steady trickle of bad economic news and it’s still not clear whether European leaders have both the ability and the political will to engineer a lasting solution. As Ken Dickson, Investment Director, Currency and Foreign Exchange at Standard Life Investments puts it: “the Eurozone debt crisis is now in the hands of politicians and it appears to be unsolvable until Europe finds a way of improving economic growth.”
Any solution has to come from the leaders of the two most powerful economies in the single currency, Germany’s Angela Merkel and France’s Nicholas Sarkozy. The problem is that the two leaders do not appear to hold entirely the same view of what this solution will look like. The signs are however that the German approach to resolution of the crisis, fiscal union, will ultimately prevail. This will require the imposition of tight controls over spending in each Eurozone member state, something which requires a rewrite of the EU’s governing rules. (more…)
November 2011 / 9 November 2011 / Dean Peters-Wright, Columnist, FX-MM
FX-MM columnist Dean Peters-Wright takes his monthly look at currencies and the underlying economic issues which are affecting sentiment in global markets.
The global economic recovery seems to have ground to a halt. Policymakers disagree on the best way forward and the large economies in the West simply cannot gain the necessary traction to get going again due to persistent high unemployment and weak performance in key sectors. Just as the root causes of the problems are somewhat different in each economy so, it seems, are the approaches for producing viable solutions. The number of economic summits and meetings of political leaders to find solutions to these economic woes seems to be endless but we don’t seem to be getting too many answers at the moment. The financial markets have been in turmoil in recent months and almost every news headline coming out of the Eurozone takes them in a new and unanticipated direction. Traders in all asset classes are finding the markets tough. As Kathleen Brooks, Research Director at forex.com explains, “although asset classes are correlated they are not moving in a trend. Instead they are all stuck in ranges, which can make for some frustrating trading conditions. Europe is still the dominant theme in the markets and until the crisis is solved one way or the other – either satisfactorily or not – then it is hard to see stock indices breaking out.” (more…)
Currency news, News / 4 November 2011 / CNNMoney
China will make new commitments on its exchange rate policy Friday as part of the official Group of 20 communiqué, according to a U.S. official close to the matter.
(more…)
October 2011 / 11 October 2011 / Phil Weisberg, CEO, FXall
The execution methods employed for foreign exchange currency trades have become an important consideration in the achievement of trading strategies and objectives. Phil Weisberg, CEO of FXall, explores the necessity and benefits of thoughtful execution policies in light of the increased attention by regulators and investors on how risks are managed within financial markets.
Regulatory reform in the US and Europe is changing the financial market structure, considerably and irreversibly. A common thread throughout the financial markets is the resolve from regulators, policymakers and market participants to increase transparency, reduce systemic risk and strengthen investor confidence. Across all asset classes, the implementation of “thoughtful execution” practices is now almost unanimously considered a critical part of ensuring protection for the end investors. (more…)
October 2011 / 11 October 2011 / Dean Peters-Wright, Columnist, FX-MM
The world has teetered on the brink of financial collapse for so long that it seems that the markets are now ruled as much by fear as reality. Over the last few months the global financial system has shown just how complicated it really is and in a strange paradox, brought about by the continual state of anxiety, it has shown that it can be both robust and delicate at the same time. That is not to say that the hardship being felt is anything other than substantial and high unemployment levels in all major developed economies are taking their toll.
The difficult situation in the world economy is forcing political leaders and the financial authorities to come together to find solutions which will pull the world back from the precipice. It is not a lack of ideas that is the issue but rather the lack of definitive action. The Sovereign Debt crisis in Europe, the danger of a US recession, rising global prices and the hope that emerging markets will drive growth are all part of the mix. Recession reality is now outpacing recession fear in the US, and Greece seems to be moving toward default of some kind. Time seems to be running out for solutions to be found. (more…)
September 2011 / 13 September 2011 / Dean Peters-Wright, Columnist, FX-MM
It seems that every one is looking for the light at the end of the tunnel that still eludes the world’s economies. UK growth indicators are not encouraging and inflationary pressure is coupled with job losses and real income loss. While US treasuries have remained attractive against all odds, the second round of Quantative easing finished in June and there is no further room to stimulate growth. Furthermore, market reports from the Eurozone expect a weak euro although no clear direction seems to have been taken over the medium term, writes Dean Peters-Wright.
Crossroads
The UK, the US, Europe and Japan have all had their troubles over the first half of the year and each region has fought gallantly to continue functioning within an economic climate that has put obstacle after obstacle in the way of growth and prosperity. The circumstances have been anything other than normal and each problem solved has led to the next in a chain of events in the ongoing debt crises. (more…)
August 2011 / 9 August 2011 / Dean Peters-Wright, Columnist, FX-MM
Dean Peters-Wright looks at the events taken place in the last few weeks within the USA, China and Europe and provides an analysis and what impact this is likely to have on business.
July set the stage for global economics to come to a pivot point resulting in a possible incremental step forward for both Europe and the US to follow. Both regions will put in place mechanisms that will lead towards recovery and it is hoped with an element that has been missing: significant growth. It can be seen that these steps are actually more likely to be a temporary band aid and the issues will have to be dealt with again further down the line. The concern is a world wide financial implosion; however this is unlikely, although the US is cutting it very close to the deadline of 2nd August. (more…)
June/July 2011 / 24 June 2011 / Dean Peters-Wright, Columnist, FX-MM
The global recovery continues to drag its heels. A combination of slow growth brought about by suffocating debt and monetary tightening, an entanglement of supply and demand for commodities and materials, as well as supply chain disruptions has left economic growth across many nations moderate at best. These economies are vulnerable to exposure from further disruption and as such, political and economic decision makers are in a constant battle to avoid ‘the straw that could break the camel’s back’ as this may lead to a wide spread double dip, says Dean Peters-Wright.
The European Union is still in ‘deadlock’ as the single currency bloc continues to move towards a problematic, two-tier economic pace. Inflation and debt remain the major constraints weighing on the Eurozone, yet the solution to one hinders the solution to the other: as national debt and austerity measures incite public spending cuts and constrain growth, so inflation worries call for interest rate hikes and a depressed ability for lending, leading to an insecure balance that will take some time to even out. (more…)
May 2011 / 19 May 2011 / Dean Peters-Wright
Credit ratings, political opinion and civil disputes, Dean Peters-Wright analyses what the European issues, the negative outlook on the US economy and the continued unrest in the Middle East and North Africa has on the economy, business and currencies. (more…)
April 2011 / 8 April 2011 / Dean Peters-Wright
From Europe to Japan and on to the Middle East, Dean Peters-Wright, provides analysis on the latest macroeconomic events and the impact they are having on currencies, businesses and economic growth.
Ireland continues to negotiate the scope of its ECB bailout package, as the country’s banks face the scrutiny of the latest stress tests that will ultimately determine the interest rates at which Ireland will pay it back. The spotlight, however, has been taken quite dramatically by Portugal, with Spain backstage ready to come on at any moment and the audience desperately hoping that the curtain will come down long before that. (more…)
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