U.S. Recession? Who Would Be Next?
Financial markets in most countries have been in turbulence in recent days due, at least in part, to growing concerns about prospects of a U.S. recession and implications thereof for growth in foreign economies. Although our view is that the U.S. economy will narrowly miss recession in 2008, we proceed…
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FX Crossroads: USD, Recessions, and Fed Easing Cycles
Our call for a weaker dollar in the coming months is consistent with past performance during recessions. Our prediction of a reversal of the dollar bear trend between 6 and 12 months from now against most currencies also seems to fit the picture pretty well. Our forecasts are biased for…
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Long Term View of the USDJPY
Despite the fact that we really believe that the USDJPY will rebound from here in the very short term (from 106 to maybe 110), we found necessary to remind our readers about the long term view in this pair. In fact nothing has really changed since our last piece on…
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FX Strategy - AUD: What Goes Up…
AUD is highly overvalued compared to levels implied by long-run equilibrium and will have to see a significant correction. When this correction will take place, however, and how gradual it will be, is uncertain. While relative growth and interest rates remain favourable, three factors will weigh on AUD in 2008,…
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USD/JPY Medium Term Outlook
The suggestion form June 2007 for a giant terminal impulse started from 101.66 (January 2005) looks the best scenario at the moment. This count is presented on the chart and suggests that the terminal impulse finished at 124.12 (June 2007). We saw a sharp sell-off from the last level and…
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EUR/USD Medium Term Outlook
As a whole, there is no change in the wave count since the last update. The chart shows the movement started from 0.8563 (February 2001). As I wrote many times I think that the previous downtrend ended at this level (with a reversal triangle) and started the current very strong…
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Strategic Outlook 2008: A Rocky Ride
Here at the beginning of 2008 the uncertainty about the development in the financial markets has not been higher in several years. This uncertainty has resulted in falling equity prices, lower yields on long-term government bonds and widening yield spreads. The uncertainty has been fuelled by concerns about a recession…
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Economic and Financial Outlook 2008
The global growth cycle has peaked. So far, the slowdown has been led by the US and the UK, which have been mostly exposed to the credit crisis. During the year the weakness will spread to Europe and to some extent emerging markets. However, we still expect emerging markets to…
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2008 Annual Outlook
The Fed will need to cut the federal funds rate twice more in the first quarter. Recent actions suggest the Fed is committed to ensuring liquidity and the stability of global money markets. However, with renewed growth in the U.S. economy and lingering concerns of inflation, the FOMC will be…
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USD/JPY 2008 Outlook
In the fourth quarter of 2007 the Japanese yen enjoyed its best performance against the greenback in more than 2 years. For a time USDJPY even dropped below the psychologically critical 110 barrier before recovering by year end. Yen strength however was driven strictly by risk aversion dynamics rather than…
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