- This week brings inflation data from the US, Eurozone and the UK.
- Market concerns have shifted from rising global inflation six months ago to global deflation now.
- Deflation risks have risen given the deteriorating growth outlook…
- Negative headline inflation prints are expected in a number of economies.
- But continued aggressive policy action makes outright deflation unlikely.
- Even so, the fear of deflation is likely to remain a market theme in 2009.
- US equities closed 1.7% higher on last Friday. The markets initially traded lower when the $14b bailout for the big 3 auto manufacturers failed to pass in the Senate, but caught a bid after the White House suggested that TARP funds may be used to bailout the auto companies.
- The macro news over the past week continued to be negative. Last week’s surge in US initial claims data, the weaker than expected IP reports across Euroland and the November contraction in Chinese imports and exports further highlights that the global slowdown continues to gather steam. This morning China also reported very weak IP numbers and the BoJ Tankan survey indicated a further deterioration in business confidence.
- The biggest event of this week will be the Fed’s rate decision tomorrow where market expects a further 50bp cut to 0.5% but the market will be looking for any further statement of what the Fed can do on policy beyond cutting interest rates.
- On the data front this week, besides the important inflation data from the US and Europe, the string of US housing data, the German Ifo and European PMIs will be of focus, with the activity data likely to suggest that the macro environment remains fragile.
Forex Market Overview - 12/15/2008
December 15th, 2008 · No Comments
Tags: Forex Market
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