Daily Forex News

The chief savior for the United States in this economic, financial and banking crisis, aside from China of course, will be the American consumer. If United States economic growth is to resume there is no possible substitute for American consumer spending. It is the average US family budget that is…

Friday morning in Asia, the euro remained under heavy selling pressure against its major counterparts as the European Central Bank said yesterday in its monthly bulletin that the world economy, including the euro area, is undergoing a severe downturn. The euro thus plunged to a new 1-month low against the pound, new 3-week low against the dollar and a 2-day low against the yen.

CPI increased by 0.4% mom in February, due to higher energy prices, and thus the annual rate did not enter negative territory. But this is likely to happen in March, as we expect CPI to have risen by 0.1% mom: average gasoline prices only went up slightly, and the retail…

EMU industrial production is likely to have continued decreasing in February, as the corresponding national figures did. Following its seasonal pattern, the EMU trade balance will probably have improved in February, just like the corresponding German figure. Final HICP inflation in the eurozone will probably be confirmed at 0.6% in…

It is a busy week for data in the US, which should provide some important clues about the pace of the overall economic contraction in the first quarter of 2009. First quarter corporate earnings releases will also be informative and are likely to influence equity markets this week. There will…

Major currency markets traded in a fairly narrow range this week, reacting to corporate news but also heeding developments in the global economy. As the dust settled from the G20 meeting, optimism over bank earnings and hopes that some parts of the US economy are stabilising bolstered demand for emerging…

The Reserve Bank announced a 25bp cut following the Board meeting on Tuesday. Westpac had consistently argued that the Bank was likely to keep rates on hold for a number of months to assess the impact of the recent aggressive rate cuts and substantial fiscal stimulus packages which are being…

Slowly but surely data is pouring in enough to paint a fairly clear picture of the state of North American economies in the first quarter of 2009. Unfortunately, the image is not a pretty sight. Nothing speaks of the reality of the recession more than the state of the job…

The weakness in the euro has been most noticeable. EUR/USD has drifted back toward its lowest levels in a month, nearing levels not seen since before the Fed’s quantitative easing announcement. Dealers are calling the pre-QE level of 1.3130 as a key point and noting that any breech could bring…

Yet another country vows to take aggressive action against the recession

As the global recession deepens, it is no surprise that a number of countries are taking action. For many countries, the only path left to economic stimulus is quantitative easing. Japan is one of those countries; one of the weapons to be used in order to combat the recession is a $154 billion economic stimulus plan.

For Japan, this is fairly huge. The $154 billion represents about 3% of the country’s GDP. There is a tax break for gift money that parents can give their children to buy a home, and there are loan guarantees for financial institutions that want to buy stocks.

More details are expected to be unveiled tomorrow, including measures that should help lending to businesses, unemployment benefits and support the development of solar energy. Japanese officials know that taking on this debt may not be great for the underlying fundamentals of the economy. However, reports the Financial Times, they insist that things could be much worse:

Using fiscal policy aggressively “will damage the already poor fiscal position but tolerating extended deflation and recession would probably be worse for the path of government debt,” he said.

Japan plans to issue bonds in order to help pay for the spending spree. The reasoning behind the increased spending is remarkably similar to that used by the U.S. when defending its large economic stimulus plan spending.

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• Global Recession and Currencies
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