Forex Research

July 4, 2017 (Howard Friend, Portfolio Manager ATFX Europe) – The recent decline in the value of the US dollar must have come as a bit of shock to most market participants as it flew in the face of the conventional wisdom which has prevailed since the financial crisis of 2008.

In the aftermath of the crisis the US dollar suddenly found favour as bout of `safe haven` buying effectively put a floor in place under the market with subsequent attempts to break lower in 2009, 2010 and 2011 all being met by very strong demand around this price level.

A period of stability then ensued culminating in the low volatility environment witnessed between 2012 and early 2014 which was followed by a powerful advance starting in H2 2014 which skewed market psychology firmly in favour of the US dollar bull camp which is broadly where we stand today. Here is a chart of the Trade Weighted USD courtesy of the Board of Governors of the Federal Reserve System.

Being a long-time observer of market price dynamics one can`t help getting a sense of déjà vu when looking at the chart of US dollar index as it bears a very familiar Elliott Wave price structure to one seen not so long ago.

Since topping out in 1985 the US unit has been trending broadly lower. The first leg of the bear market was quite dramatic in that bounces were relatively shallow as selling pressure weighed down on the price resulting in a sharp decline with very powerful momentum characteristics. This first phase (which I will call the “momentum” phase) based out in December 1987 and then a good-sized recovery ensued over the next 18 months which I have labelled as the (a) leg of an a/b/c Elliott Wave (bear market) correction.

After the (a) leg topped out in June 1989 the bear market resumed but a subtle change occurred as each push to a new low for the trend formed a so called “overlap” as it was followed by a powerful counter-trend rally which eclipsed the previous swing low. I have termed the (b) leg as the “choppy decline” phase of the bear market.

After basing out in April 1995, the (c) leg got underway lasting some six years before a top formed to complete the entire a/b/c (bear market) correction paving the way for the next phase of the long-term downtrend.

Hitting the fast forward button and turning to more recent price action we can see that a similar structure unfolded from the 2005 swing low (labelled “MOM LO”) to the January 2017 swing high. The (a) leg rebound from “MOM LO” (as in 1988/89) saw the strongest advance of the bear cycle to date which was followed by a choppy, overlapping decline (“choppy decline”) to new lows for the downtrend in the (b) leg of the pattern which finally based out in May 2011 at the all-time low.

The rally from there broke down into five sub waves as it usually does in the (c) leg position, with the breakdown from this January`s peak seen as the initial stages of a new multi-year downtrend for the US dollar.

In addition to my reading of the Elliott Wave price chart structure there are other supporting factors which favour a lower USD going forward.

Since President Nixon scrapped the Bretton Woods Agreement in 1971 and in particular since the late 1980s there has been a clear bias for Republican Administrations to preside over a weaker currency. The US dollar has declined in value by close to 14% over the combined terms of Republican Administrations while it has risen by an average of 15% when Democrats have been in power.

The current incumbent has stated a strong desire to address what he sees as an unfair advantage his trading partners have over the United States via a weak currency so a weaker US dollar may not meet with too much displeasure in Washington DC.

Long-term cycles

Since becoming a free-floating currency, the US dollar while seeing a gradual decline in value against its main trading partners, has seen some very powerful multi-year price swings in both directions. Since August 1969 there have been six major price swings lasting an average 7.9 years and seeing a typical change in the value of the US dollar of some 67%.

At the January 2017 peak, the USD had been rising for five and a half years since the all-time low and over eight years since the 2008 financial crisis in a move which saw a net gain of around 54%. The extent and duration of the recovery in the US unit placed it in a highly vulnerable position, i.e. ripe for a bearish turn in major trend.


The recent crack in the armour of a previously impregnable US dollar may be dismissed as “corrective” or “temporary” by those who are unable or unwilling to consider changing their inherently bullish bias to the world`s reserve currency. However, as Bob Dylan once said, “The Times They Are A Changing” as evidence from many quarters points to the dawn of a not so new multi-year downtrend in the U.S. unit.

A devaluation of 20 to 30 percent from current levels against the major currencies would not be out of the question and may well turn out to be a conservative estimate of what one can expect if history is anything to go by. Don`t get caught fighting the last war…


May 7, 2017 (Howard Friend, Portfolio Manager for ATFX Europe) – The storming of the White House by Donald Trump last November created not just the usual ripples on a change in U.S. leadership but many shockwaves both at home and abroad as the world holds its breath waiting for the ‘New Normal’ to emerge.

For those trying to get a handle on what to expect over the next four or more years the early months of the Presidency have been a little perplexing to say the least. Differences have emerged between Mr. Trump’s isolationist pre-election rhetoric and some of his actions in the Oval Office, particularly in the field of foreign policy which has seen unilateral action in Syria, strong assurances given to NATO and the ramping up of stakes with North Korea.

Despite all the confusion and contradictions witnessed so far it is worth pointing out that while in what used to be called ‘the free world’ the leader of the elected political party holds a very large amount of sway over government policy, he or she will still need a groundswell of support to retain power. This involves consensus-building and compromise with the various power brokers within the ruling party which inevitably leads to some dilution of the power of the president relative to the party.

Assuming the ‘party over president’ theme holds true in this case and that the core values of the Republican party are to dominate the major policy decisions going forward I thought it would be a worthwhile exercise to review the historical performance of the U.S. dollar during various Republican administrations to see whether there were any common themes which could affect the value of the currency. Here’s what I discovered.

Since Nixon’s landslide victory and inauguration in 1969 there have been eight U.S. presidents prior to the current incumbent. I list them here along with the accompanying percentage change in the dollar as measured by the U.S. dollar exchange rate verses the Euro since inception in 1999 and its constituent parts prior to inception.

U.S. Presidents (1969 to 2017)
Richard Nixon (January 1969 to August 1974) : Percentage change in U.S. dollar:  -16.23%
Gerald Ford (August 1974 to January 1977) : Percentage change in U.S. dollar:  +2.23%
Jimmy Carter (January 1977 to January 1981) : Percentage change in U.S. dollar:  -10.28%
Ronald Reagan (January 1981 to January 1989) : Percentage change in U.S. dollar:  +9.79%
George H.W. Bush (January 1989 to January 1993) : Percentage change in U.S. dollar:  -8.68%
Bill Clinton (January 1993 to January 2001) : Percentage change in U.S. dollar: +30.80%
George W. Bush (January 2001 to January 2009) : Percentage change in U.S. dollar:  -29.13%
Barack Obama (January 2009 to January 2017) : Percentage change in U.S. dollar:  +24.72%

The trend in the currencies of the Eurozone against the U.S. dollar from the late-1960s to date shows a slight upward bias in the trend (downward bias for the USD) since 1985 when the G5’s Plaza Agreement halted the steep rise in the value of the dollar seen during the early Reagan years. While the bias has on balance been for a lower dollar over the whole period it is worth noting that there have been a number of significant price swings of large duration which provided opportunities for the global macro investor. Note that the decline (U.S. dollar advance) which has been in effect since 2008 has held above the trendline coming in from the 1985 and 2000 lows – a positive sign for the market technicians among us.

Putting these price swings into the context of who was in the White House at the time a very interesting fact stands out. The dollar has tended to fall when a Republican has been the incumbent with three out of the five Republican presidents presiding over a decline in the currency while only one of the three Democratic presidents (Carter) at the wheel while the dollar fell.

Taking a closer look at the numbers and counting the full terms of the ruling parties sheds some more light on what could be an inherent ‘bias’ towards the currency dependent on which party has been elected. I list the administration by party and changes in the value of the dollar below:

U.S. dollar: percentage changes by political party (1969 to 2017)
REPUBLICAN: Nixon and Ford (January 1969 to January 1977)
Percentage change in U.S. dollar:  -14.37%
DEMOCRAT: Carter (January 1977 to January 1981)
Percentage change in U.S. dollar:  -10.28%
REPUBLICAN: Reagan and Bush (January 1981 to January 1993)
Percentage change in U.S. dollar:  +0.26%
DEMOCRAT: Clinton (January 1993 to January 2001)
Percentage change in U.S. dollar:  +30.80%
REPUBLICAN: G.W. Bush (January 2001 to January 2009)
Percentage change in U.S. dollar:  -29.13%
DEMOCRAT: Obama (January 2009 to January 2017)
Percentage change in U.S. dollar:  +24.72%

The 1970s were not a good time to be holding U.S. dollars under administrations of any stripe. The decline which followed Nixon’s departure from the stability of the Bretton Woods Agreement saw a net loss for the combined Republican term at 14.37% which was extended under Carter before Reagan and monetarism saved the day, halting the inflationary spiral which had dogged monetary policy during the 1970s. Apart from the fact that Nixon abandoned the stability of a ‘pegged‘ exchange rate in favour of a floating (or sinking) currency, no major party political biases were apparent until the latter half of the 1980s.

Things started to become clearer during Reagan’s second term and into Bush senior’s sole term as the dollar saw a complete reversal in its post-Plaza Accord advance by the time the Republican triple-term had ended in 1993. Some might say that the next president, Mr. Clinton, may have benefitted from a ‘peace dividend’ as an extended period of global stability unfolded following the end of the Cold War which may have contributed to the first sustained period of strength under a Democratic President. The U.S. unit ended his scandal-hit second term some 30% higher than where he found it eight years prior.

The Clinton Presidency gave way to a less sanguine era in which George W. Bush gifted the world with a post-9/11 “with us or against us” consensus which saw the controversial involvement in Iraq and the 2008 financial crisis. Looking through the rear view mirror it may come as no big surprise that the dollar ended nearly 30% lower at the end of his tenure but could it have been a case of returning to type under another long period of Republican control?   The third successive 20% plus move in the U.S. unit occurred under Mr. Obama who had to adopt many of the foreign policy stances of his predecessor whilst fighting the fires of the financial crisis. While government finances continued to deteriorate the fact that confidence slowly ebbed back into the financial system after the meltdown along with a broad disengagement from far away wars and combined with woes in the Eurozone may have helped to put a floor under the greenback.

Despite all of the major events on the world stage which have occurred since the end of the 1960s, which conventional wisdom would argue for a stronger or weaker US dollar the facts are as follows:

REPUBLICAN presidential terms have seen an average DECLINE in the US dollar of 14.41%
DEMOCRATIC presidential terms have seen an average RISE in the US dollar of 15.07%

A good case for a bearish turn in trend?

Regardless of whether one believes that movements in the value of the U.S. dollar or the Euro for that matter are dependent on external shock events (Rumsfeld’s ”unknown unknowns”) or indeed the policy decisions of those in power who are guided by their own collective political persuasions, it is worth noting that financial markets often appear to have a ‘life of their own.

As with most things in life there are often long-term trends and cycles at work which have a strong pull on prices over time which can create logic defying price movements. Of note in this case is the fact the six price swings I have highlighted have shared similar characteristics in terms of extent in particular in terms of duration which begs the question: Where could we be in the current cycle? Here are the average price swings from 1969 to 2016 along with details of each price swing:

Average percentage change: 67.24%
Average duration:  94.83 months (7.9 years)
August 1969 to October 1978: Duration: 110 months, percentage change: -36.08%
October 1978 to February 1985: Duration: 76 months, percentage change: +130.15%
February 1985 to September 1992: Duration: 92 months, percentage change: -57.39%
September 1992 to October 2000: Duration: 97 months, percentage change: +77.14%
October 2000 to July 2008: Duration: 93 months, percentage change: -48.39%
July 2008 to December 2016: Duration: 101 months, percentage change: +54.28%

As at the time of writing (25th April 2017) the Euro/US dollar exchange rate is trading around the 1.0900 level having found support in the 1.0300-1.0500 region following the 2014/2015 slide which completed the larger decline (U.S. dollar advance) from the 2008 peak. This begs the question: Could the last major up cycle for the U.S. dollar have run its course? A comparison with the extent and duration numbers seems to point in that direction as the last U.S. dollar uptrend had been in effect for 101 months (versus 94.83 months) at the December 2016 U.S. dollar peak while the extent number of +54.28% fell a little short of the 67.24% average price movement but was well within the historical range.


While the political, economic and cyclical drivers which ultimately produce the large trends in asset prices can often be at odds with each other at least two of these dynamics have in my view created a ‘perfect storm’ for the U.S. dollar. Republican governments have tended to coincide – either by accident or by design – with a falling currency while the U.S. dollar has actually been rising (EUR/USD falling) for longer than its historical average term which suggests a very high risk of seeing a much lower U.S. dollar over the next few years.

While the Eurozone will undoubtedly have its own problems to contend with not least keeping the bloc together post-Brexit my guess is that whatever may be in store for the U.S. over the Trump presidency could be (or more importantly, perceived to be) relatively worse than the issues facing Europe. For those who are in the business of forecasting currency rates this is the salient point as one currency is measured in terms of another as there are two sides to the equation.

Whatever the drivers of the impending under performance of the US dollar may turn out to be the paradox is that a weaker currency will ultimately provide a boon to Trump’s “America first” agenda as the so called “currency manipulators” will finally be brought to book courtesy of yet another competitive devaluation in the almighty U.S. dollar. Watch this space…


Jan. 2, 2017 (Commerzbank AG) – Investors will have to keep a close eye on politics next year. We believe Donald Trump’s policies will stimulate economic growth and inflation only to a limited degree. That said, his election has triggered a long overdue reappraisal of the US economy.

As in the USA, anti-establishment movements are expected to continue gaining support in the euro zone which could result in political paralysis. The risk of a renewed sovereign debt crisis weighs on the economy, especially as the ECB’s monetary policy is close to its effective limit.

In China, the economy is suffering from the fact that the state will continue to keep highly indebted state-owned companies afloat. China is still battling a major exodus of capital. As we expected, the government has responded by reversing recent steps to deregulate capital movements. Since the beginning of this month, companies face the prospect of no longer being able to transfer dividend payments abroad.

These measures may help to apply the brakes in the short term, but in the longer term they will deter potential investors. In the medium term, further capital controls seem more likely than a return to the cautious deregulation of recent years.

Gold: better times ahead?

Recent pressure on the gold price is likely to become less significant over the course of next year. Indeed, ultra-loose global monetary policy, which results in low real interest rates, and great political uncertainty are likely to provide a tailwind for gold prices. We expect gold to rise to 1,300 USD per troy ounce by the end of 2017.

WIll the strong USD trend continue?

The markets are taking the Fed at face value when it suggests that rates are likely to rise more sharply. The market will therefore probably react asymmetrically: good data should help the U.S. dollar more than poor data will harm it.


Dec. 28, 2016 (Amplify Trading) – Amplify’s Head of Trading, Piers Curran, provides his 2017 insights. Below is a summary of what Piers thinks for some of the biggest issues facing the global financial markets in 2017.

We close out a extraordinary year for global markets. Several of the key economic risks materialised with the UK’s Brexit vote, Trump’s stunning election win, Renzi’s lost referendum and the Fed hike to cap it all off. Who would have dared predict that given these outcomes US equities would be surging to new all time highs as we march into Christmas. The notable takeaways from 2016 are Sterling weakness, markets pricing in Trump’s stimulus package with a steeper Fed rate hiking trajectory resulting in a sharp spike in bond yields, a surging US Dollar and rampant equity markets. One can’t help think of one word: complacency.


Unfortunately, the probability of further terrorism in Western Europe is rising, which will impact Angela Merkel’s ability to win a record fourth term in the German election in H2 2017. I believe that, outside of Brexit, this now becomes the biggest European political risk. Italy: After their referendum it will likely be an unchanged scenario, no reform and no growth. France: Presidential elections in April/May 2017 will be a temporary distraction, ultimately I don’t think Le Pen can win as France has a two stage election process which makes it much more unlikely for a shock result to occur a la Brexit and Trump. But for sure European politics stays at the top of the global risks list for 2017.


Sorry to be bah humbug but I expect the first half of 2017 to show a notable change for the worse in market sentiment on this issue! As we approach the trigger date for article 50, I expect politicians on both sides of the Channel to posture for the forthcoming battle. This should trigger the next leg lower for Sterling (GBPUSD to sustain a break below 1.20 and head towards 1.10), which in turn will exacerbate a growing unease over rising inflation and, although FTSE100 stocks may stay supported due further currency weakness, I see the economic risks outweighing the cheap currency benefits to weigh on global equities.


I believe the most significant factor is that Saudi Arabia’s strategy has now reversed for the first time in two years, whereby they are actively supportive of sustaining a move above $50 per barrel. This is tied into both their desire to diversify their economy, which involves a Saudi Aramco IPO in early 2018, and the fact that the market share they lost to US Shale producers has been returned to them via increased Asian demand. However, history tells us that OPEC implementation risk should never be ignored so whilst there is likely to be volatility in Q1, I believe the price of oil will spend most of 2017 between $50 and $60 per barrel.


US equities are finishing 2016 on all-time highs. Whilst I think that this can continue in the first few weeks of 2017, I believe that the 2017 high for the year will be printed in the first month of the year. Markets are irrationally pricing in a full and quick Trump fiscal stimulus package, and I expect the reality to be much more disappointing. Whilst Congress is Republican, they will want to remind Trump he doesn’t have free reign by  stalling and trimming his fiscal package. As a result, I expect to see equities give back some H2 2016 gains, the US dollar to do the same and for the Fed as a result to be more dovish than the three 2017 hikes projected.


Italian Banks need at least €52 billion to clean up their balance sheet which is a much larger amount than the Italian Government’s proposed €20 billion rescue package outlined on the 19th December. I think it is inevitable that Banca Monte dei Paschi di Sienna gets fully bailed out and becomes stated owned in 2017. However, even though in the long run this continues the slow motion demise of the Eurozone’s third largest economy, in 2017 the ECB should have enough ammunition to delay the eruption of this longer term ticking time bomb. In the  meantime the Italian economy continues to flatline with an on-going inability drive through any much needed reform.




Nov. 25, 2016 (Commerzbank AG) – On December 4, Italy will technically ‘only’ be voting on reform of the Senate, which is merely a constitutional amendment.

However, the outcome of this referendum could result in serious difficulties for the euro zone in the medium term. If the proposed reform motion is rejected, there could be an early general election, resulting in a government led by the eurosceptic Five-Star movement.

Its spending policies would probably push up Italy’s sovereign debt even further, and there would then be a serious risk of a ‘buyers strike’ by investors; a sharp rise in yields on Italian government bonds and the euro zone sliding towards a second government debt crisis.

With the EUR nearing important long-term support at $1.0469, a negative outcome of the “Italian Roulette” game in early December could very well serve as a catalyst for further weakness of the single currency.

June 27, 2016 (Commerzbank AG) – The world seems different these days following the Brexit vote and after two days of a sell-off in the global markets. The GBP is at its lowest level in three decades and the safe haven currencies are back in demand. So, what’s next for the major central banks?


At her semi-annual testimony before Congress, Janet Yellen proved very cautious. While remaining optimistic mediumterm, she considers the latest weak jobs growth figure to be no more than a temporary loss of speed. However, the Fed – or at least Yellen – appears to be moving closer to viewing current low growth as a sign of “secular stagnation”. In that case, low productivity gains would be here to stay. Yellen considers the relatively low momentum of investment as a warning signal. In the first quarter, private non-residential investment was 0.5% below the previous year’s level. Therefore, she went on, the equilibrium interest rate was low by historical standards. This is behind the FOMC members’ predictions, which look for a policy rate below 1% by end- 2016 and below 2% by end-2017. Hence, only gradual rate hikes would be expected. Following the “zig” in May – when one FOMC member after another had signalled higher key interest rates – Fed communication has now returned to “zag”.


ECB president Draghi urged euro zone policy makers to support the economic recovery by implementing economic reforms. Draghi’s comments underscore the central bank’s recent message that it has probably done enough for the time being and will now wait to see how its recent policy measures unfold. While Draghi stressed that time is needed for the full pass through of the bank’s measures, at the same time he added that the ECB would act if it saw an unwarranted tightening of financial conditions. ECB Executive Board member Mersch said that he would be the last person to claim that interest rates can be reduced ever further into negative territory. He explained that the ECB wants to prevent “collateral damage for financial market players” and “panic saving”, i.e. people start to save more because they think the period of low rates will last a long time. Draghi emphasised that the judgement of the German Constitutional Court confirmed that the OMT programme is compatible with EU law and falls within the ECB’s mandate. Yves Mersch stressed that the ECB has introduced an issuer limit for the bank’s QE programme as the European Court of Justice “explicitly highlighted” that such limits are needed for the purchases to be compatible with law.

BoE (Bank of England)

With the UK electorate surprisingly voting to leave the EU, and thus wrong-footing the markets, UK asset prices have come under significant selling pressure. The GBP-USD exchange rate at one stage registered a 13% peak-to-trough decline in the space of less than eight hours. Following the plans set out ahead of the referendum and today’s statement (“take all necessary steps”), the BoE will stand ready to inject substantial amounts of liquidity into the market, which will act as the first line of defence prior to any possible rate cut. We do not anticipate at this stage that the collapse in sterling will be uppermost in the BoE’s mind – it makes little sense to stand in the way of a falling knife particularly in view of the fact that this is the most savage move on daily data back to 1971. Far more likely is that the BoE will intervene judiciously only when the time is right (i.e. when it believes it has a chance of achieving the desired effect) in order to nudge the exchange rate. With FX reserves at all-time highs, it has the means to act if desired but there will be no desire to squander them unnecessarily. With regard to rate cuts, the BoE does have this option but having failed to jack them up in 2014 when it had the chance, it is constrained in its choice of actions with Bank Rate effectively at the lower bound.

BoJ (Bank of Japan)

Since the announcement of its extremely expansionary monetary policy (“quantitative and qualitative easing”, QQE) in April 2013, the Bank of Japan has bought government bonds equivalent to around 50% of GDP. It holds roughly 36% of all outstanding Japanese government bonds (JGB) at present and – with the speed of purchases unchanged – is likely to hold around half of all JGBs by the end of 2017. Even the IMF has warned that the BoJ will have to reduce its asset purchases by the end of 2018 to ensure that the government bond market continues to work properly. Even with this aggressive approach, the BoJ has been unable to reach its fundamental goals so far. The plan to drive inflation to 2% by the end of fiscal 2017 (March next year), in particular, appears increasingly illusory. In April, the corresponding measure of inflation – i.e. excluding fresh foods – stood at -0.3%. This is partly due to the significant yen appreciation in recent months which continues to prevent any major inflation pressure from unfolding. The BoJ’s scope for counter-measures appears limited. QE is proving difficult to expand (this also applies to the ETF purchases). Hence, the only “alibi measure” left appears to be a minimal rate cut. The next BoJ meeting will take place in late July.






May 5, 2016 (Tempus, Inc.) – The Japanese Yen strengthened further as a result of pessimism across global markets. The safe-haven currency is now 13.0% stronger in 2016. This is worrying Minister of Finance Taro Aso, who spoke over the weekend about the need to consider intervention in the FX market.

He said it was “extremely concerning” that last week JPY experienced a five-yen move in a matter of only two days last week. Aso added that this was “clearly a one-sided speculative move” and that under the G-20 agreement a response to this kind of wild swing would be appropriate.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda said monetary policy is currently focused on price stability and not on the exchange rate. The U.S. complained last week that Japan and China are not doing enough to monitor FX and accused them of unfair practices.

If the British people take a democratic decision to do something – in this case change the benefit system – they should be able to do so without having the prime minister scuttering around Europe asking permission…

Powered by article titled “Democratic decisions on benefits of the EU” was written by Letters, for The Guardian on Tuesday 15th December 2015 19.32 UTC

Zoe Williams misses the point about Cameron’s negotiations with EU member states (There is no master plan. On the EU, Cameron is flailing, 14 December). Restricting benefits to EU migrants may or may not be a sensible, legal or logical way to meet the concerns of people, be they “Ukip-minded” or not. But once our PM had to ask permission to do so, the issue was completely transformed. It is no longer one of EU migrants’ access to benefits, but the far more fundamental question of who decides how British taxpayers’ money is spent. It became a question of national sovereignty. That’s why organisations such Trade Unionists Against the EU are not awaiting the outcome of “negotiations” and are campaigning to get the UK out. The issue is as simple as it is clear: if the British people take a democratic decision to do something – in this case change the benefit system – they should be able to do so without having the prime minister scuttering around Europe asking permission. This will continue to be the case while the UK remains a member of the EU.
Fawzi Ibrahim
Trade Unionists Against the EU

• David Cameron’s negotiations on limiting in-work benefits for EU immigrants appear to have won little support. One simple approach might be to limit levels of benefit to those payable in the country of origin of the European migrant. That would deter those seeking to exploit the system and could disarm politicians in other member states, who would no longer be able to claim that their emigrants were being monetarily disadvantaged. It would leave the fundamental right of freedom of movement untouched.
Ken Daly
Aisholt, Somerset

• Hans Dieter Potsch, the chairman of Volkswagen, glosses over the truth of what his company did to cheat emission tests: it wasn’t a “chain of errors”, it was a chain of liars prepared to sanction a management mindset (VW admits to ‘chain of errors’ at company, 11 December). Or is he not admitting responsibility, even though he is no doubt paid a monstrous salary on the basis of being in charge? This incident just confirms that all companies need active oversight from outside to try and stop such appalling actions. They cannot be trusted any more than managers of banks and other financial groups. This is why we need the EU and strong legislation trying to stop such abuses in companies that think they can do what they like.
David Reed

• Join the debate – email © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

Eurozone ministers are expected to refuse to hand over €2bn in new loans to Greece today, as a row over bad loans deepens. Officials: Eurogroup won’t release €2bn to Greece. France: We want a deal with Greece. OECD warns on global trade slowdown…

Powered by article titled “Greece battles with creditors over new bailout payment – business live” was written by Graeme Wearden, for on Monday 9th November 2015 13.57 UTC

Wolfgang Schauble also flagged up that Greece has not yet implemented its new privatisation fund.

This was a key part of July’s bailout deal, under which €50bn of Greek assets will be sold off to cover the cost of recapitalising its banking sector.

Wolfgang Schauble

Germany’s Wolfgang Schäuble has arrived at the meeting.

He sounds fairly relaxed as he speaks to reporters.

Schäuble says that Greece has not yet taken all the required steps to qualify for its next aid tranche (according to his knowledge anyway).

Here’s the key quote from Eurogroup chief Dijsselbloem, confirming that Greece won’t get its €2bn today:

“The 2 billion will only be paid out once the institutions give the green light and say that all agreed actions have been carried out and have been implemented. That still has not happened.”

Some reaction to Jeroen Dijsselbloem’s comments as he arrived at the eurogroup meeting:

Dijsselbloem: Greece must complete first milestones very soon

Eurogroup president Jeroen Dijsselbloem
Eurogroup president Jeroen Dijsselbloem Photograph: EbS

An official limo has just deposited Eurogroup president Jeroen Dijsselbloem at today’s meeting.

He gave a brief ‘doorstep’ to reporters — it sounds like he’s not expecting to sign off Greece’s next aid tranche today.

Dijsselbloem says progress has been made in recent weeks regarding Greece’s banks and reform programmes.

But there are still open issues, and a lot more work needs to be done in the next two weeks.

The first set of milestones must be completed soon, he adds (which would pave the way to disbursing that €2bn in new loans).

And Dijsselbloem says he can’t speculate about the political crisis in Portugal where left-wing parties could soon win power.

My understanding is there will be debate today and tomorrow, says Dijsselbloem. There is always a legitimate government in each country, and that’s the government we work with….


Moscovici: Still a little way to go on Greece

Pierre Moscovici

Ministers are starting to arrive at today’s Eurogroup meeting in Brussels.

Commissioner Pierre Moscovici has told reporters gathered outside that he hopes Greece will receive its €2bn aid tranche this week, if not today.

Moscovici says he had “very positive, very fruitful meetings” in Athens last week with prime minister Alexis Tsipras and finance minister Euclid Tsakalotos.

The moves are positive. Most of the milestones are already adopted or decided. There is still a way to go.

We are not yet completely there, but I am hopeful and confident that with the spirit of compromise, with good co-operation with the authorities we can make it… if not today then in the days to come.

We are not far from that, but obviously there is a little way to go.

Moscovici then vanished inside, where he (or his team) tweeted this optimistic message too:

Shares are falling sharply on the Lisbon stock market, as investors react to the latest political upheaval in Portugal.

The main stock index, the PSI 20, has shed more than 2%, as the country’s socialist parties prepare to oust the centre-right administration sworn in two weeks ago.

Portuguese sovereign bonds are also continuing to fall, showing greater anxiety over the prospect of an anti-austerity government taking over.

The 10-year Portuguese bond is now yielding nearly 2.9%, a jump of 23 basis points. That’s a four-month high.

Over the weekend, four left-wing parties put aside their differences to support a legislative programme. They collectively hold a majority of seats in the parliament, following October’s election.

Analysts at the Royal Bank of Scotland Group have already warned that the Socialist-led program “is clearly less market-friendly than the one of the incumbent government,” Bloomberg flags up.

More here:


Greece “plans return to capital markets” in 2016

Now here’s a thing. Greece is apparently hoping to return to the financial markets next year.

Government insiders have told the Financial Times that plans are afoot to sell debt in the capital markets in 2016.

Despite the wild drama this year (capital controls, failing to repay the IMF, nearly leaving the eurozone), Athens hopes that investors will put their faith in them.

The FT says:

It won’t be in the first quarter but summer has been talked about,” said a person familiar with the situation.

“It depends on a positive chain reaction of events but discussions have been held.”

Full story: Greece plans a return to capital markets

Experienced City investors may raise their eyebrows….

On the other hand, Greece hasn’t actually defaulted on the three-year debt it issued last summer:


European Commissioner president Jean-Claude Juncker has just welcomed eurogroup president Jeroen Dijsselbloem to his office, for talks ahead of this afternoon’s meeting of finance chiefs.

Dijsselbloem got the tradition greeting:

Analyst: Greek crisis is repeating

Peter Rosenstreich, head of market strategy at Swissquote Bank, says investors need to pay attention to Greece again:

Rosenstreich is worried that Athens and its eurozone neighbours couldn’t reach agreement on how to handle the repossession of houses from people who are in default on their mortgages.

It suggests the whole third bailout deal, agreed after so much angst in July, may be in early trouble.

Rosenstreich says:

Left-wing Syriza is concerned that the high threshold will expose too many Greece citizens to the loss of their primary properties. In addition, Athens is balking at a 23% take rate on private schools.

This feels like a repeat of 8-months ago. The whole world understood that the third bailout agreement made was unsustainable. It was only a matter of time before it unraveled.

Getting back to Greece…

AFP’s man in Brussels, Danny Kemp, has heard that the outstanding issues between Greece ands its creditors *might* be resolved in a few days.

The OECD has also cut its forecast for global growth this year to 2.9%, down from 3%, due to the sharp slide in trade.

It also predicts growth of 3.3% in 2016, down from 3.6% previously.

The two demonstrators who disrupted David Cameron’s speech have revealed they created a fictitious company to get into the CBI’s flagship event:

Perhaps the CBI should get some advice from the European Central Bank, which upgraded its own security systems after a protester jumped on Mario Draghi’s desk this year…

The OECD’s latest economic outlook is online here.

OECD sounds alarm over global trade

The OECD has just released its latest economic projections.

And the Paris-based thinktank has warned that global growth is threatened by the impact of China’s slowdown on world trade, but raised its forecast for US growth.

It also urged richer countries to step up investment while keeping monetary policy loose, as my colleague Katie Allen explains.

The thinktank’s twice-yearly outlook highlights risks from emerging markets and weak trade.

Presenting the Outlook in Paris, OECD Secretary-General Angel Gurría said:

“The slowdown in global trade and the continuing weakness in investment are deeply concerning. Robust trade and investment and stronger global growth should go hand in hand.”

The thinktank edged up its forecast for economic growth in the group of 34 OECD countries this year to 2.0% from 1.9% in June’s outlook, when it had noted a sharp dip in US growth at the opening of 2015. For 2016, it has cut the forecast for OECD countries’ growth to 2.2% from 2.5%.

The OECD left its forecasts for the UK little changed with growth of 2.4% this year and next, compared with a forecast for 2016 growth of 2.3% made in June. The US economy, the world’s biggest, is now seen growing 2.4% this year and 2.5% in 2016, compared with June’s forecasts of 2.0% and 2.8%.

On the UK, the OECD said economic growth was projected to “continue at a robust pace over the coming two years, driven by domestic demand.”


Greece’s economy minister, George Stathakis, has suggested that eurozone governments might have to take a ‘political decision’ on whether Greece should get its €2bn aid tranche.

Stathakis told Real FM radio that talks with officials over how to enforce foreclosure laws have run their course:

The thorny issue is the distance that separates us on the issue of protecting primary residences.

“I think the negotiations we conducted with the institutions has closed its cycle .. so it’s a political decision which must be taken.


WSJ: Eurozone won’t release Greek loan today

Two eurozone officials have told the Wall Street Journal that there’s no chance that Greece will get its €2bn bailout loan at today’s eurogroup meeting.

That won’t please Michel Sapin, given his optimistic comments earlier. But it appears that Greece simply hasn’t done enough to satisfy lenders….

…in particular, over how to treat householders who can’t repay their mortgages. Athens and its creditors are still divided over which householders should be protected from foreclosure.

The WSJ’s Gabriele Steinhauser and Viktoria Dendrinou explains:

Senior officials from the currency union’s finance ministries were updated on Greece’s implementation of around 50 promised overhauls, known as milestones, during a conference call Sunday afternoon. While progress has been made on some issues—including measures to substitute a tax on private education, the governance of the country’s bailed-out banks and the treatment of overdue loans—Athens and its creditors will need more time to sign off on all overhauls, the officials said.

Greece needs the fresh loans to pay salaries and bills and settle domestic arrears. However, the government faces no immediate major payments to its international creditors, reducing the sense of urgency.

There will be “no agreement on [the] €2 billion,” one official said.


Drama at the CBI conference!

David Cameron’s speech has been briefly disrupted by protesters, chanting that the CBI is the “voice of Brussels”.

They’re clearly unhappy that Britain’s top business group is firmly in favour of EU membership:

Cameron handles it pretty well – suggesting they ask him a question rather than looking foolish.


Another important meeting is taking place in Brussels today.

UK business secretary Sajid Javid will discuss the crisis in Britain’s steel works with EU economy and industry ministers this afternoon.

Steel unions have urged Javid to demand a clampdown on cheap steel imports from China, which they blame for triggering thousands of job cuts across the UK steel industry:

Cameron at the CBI

David Cameron at the CBI
David Cameron at the CBI Photograph: Sky News

David Cameron is telling the CBI that he’s met business concerns, by cutting red tape and corporate taxes.

On infrastructure, he says the government has made progress – citing the planned HS2 railway – but admits there’s more to do.

We want to the most business friendly, enterprise friendly, government in the world, he adds. But the PM also acknowledges that Britain must do better on exports.

And he’s now outlining a new plan to give everyone guaranteed access to broadband, by 2020.

My colleague Andrew Sparrow is covering all the key points in his politics liveblog:

Heads-up: prime minister David Cameron is addressing the CBI’s annual conference in London. There’s a live feed here.

He’s expected to warn that he could consider campaigning to leave the EU, if his attempts to reform Britain’s relationship with Brussels is met with a ‘deaf ear’.


The prospect of yet another tussle over Greece’s bailout programme is casting a pall over Europe’s stock markets this morning.

The main indices are mainly in the red, as investors prepare to hear the dreaded phrase ‘eurogroup deadlock’ again.

European stock markets, early trading, November 09 2015
European stock markets this morning Photograph: Thomson Reuters

Conner Campbell of SpreadEx says that Greece’s “sluggish progress” over implementing foreclosure rules is an unwelcome reminder of the eurozone’s lingering issues.

The country’s next €2 billion tranche, which should be signed off at today’s Eurogroup meeting, is currently being withheld by Greece’s creditors, who are dissatisfied with the way the region’s hot potato has (or hasn’t) implemented the required reforms.

It’ Déjà vu all over again, as China’s stock market is pushed up by stimulus hopes, and Greece’s bailout hits a snag.

Open Europe analyst Raoul Ruparel points out that today’s dispute is small potatoes, compared to the big challenge of cutting Greece’s debt pile.

Greece is also clashing with its creditors over plans to hike the tax rate for private education, as the Telegraph’s Mehreen Khan explains:

That’s a slightly unusual issue for a hard-left party to go to the barricades over, when it needs agreement with its lenders to unlock the big prize of debt relief.


France: We want a Greek deal today

French Finance minister Michel Sapin.
Michel Sapin. Photograph: Lionel Bonaventure/AFP/Getty Images

France is playing its traditional role as Greece’s ally, ahead of today’s meeting of eurozone finance chiefs.

French finance minister Michel Sapin has told reporters in Paris that he hopes an agreement can be reached today over the main outstanding hurdle — how to handle bad loans at Greek banks (as explained earlier).

Sapin offered Athens his support, saying:

Greece is making considerable efforts. They are scrupulously respecting the July agreement.

One thorny issue remains: the seizure of homes for households who can’t pay their debts. I want an agreement to be reached today. France wants an agreement today.

(thanks to Reuters for the quotes)


Greek journalist Nick Malkoutzis of Kathimerini tweets that the gloss is coming off Alexis Tsipras’s new administration:

Portuguese bond yields jump as leftists prepare for power

The prospect of a new anti-austerity government taking power in Portugal is hitting its government debt this morning.

The yield (or interest rate) on 10-year Portuguese bonds has risen from 2.67% to 2.77%, a ten-week high.

That’s not a major move, but a sign that investors are anxious about events in Lisbon.

Portuguese 10-year bond yields


This new dispute over Greece’s bailout comes three days before unions hold a general strike that could bring Athens to a standstill.

The main public and private sector unions have both called 24-hour walkouts for Thursday, to protest against the pension cuts and tax rises contained in its third bailout deal.

ADEDY, the civil servants union, accused the government of taking over “the role of redistributing poverty”.

Just six week after winning re-election, Alexis Tsipras is facing quite a wave of discontent….

Dow Jones: Ministers won’t release Greek aid today

The Dow Jones newswire is reporting that eurozone finance ministers definitely won’t agree to release Greece’s next aid tranche at today’s meeting, due to the lack of progress over its bailout measures:



Greek officials have already warned that the argument over legislation covering bad loans won’t be resolved easily.

One told Reuters that:

There is a distance with lenders on that [foreclosure] issue, and I don’t think that we will have an agreement soon.

Prime minister Alexis Tsipras discussed the issue with Commission chief Jean-Claude Juncker yesterday.

The official added that those talks were a step towards resolving the issue at “a political level”; Greek-speak for a compromise hammered out between leaders, rather than lowly negotiators.


Greek debt talks hit by foreclosure row

University students holding flares burn a European flag outside the Greek parliament during a protest in central Athens last Thursday.
University students holding flares burn a European flag outside the Greek parliament during a protest in central Athens last Thursday. Photograph: Petros Giannakouris/AP

After a couple of quiet months, Greece’s debt crisis has loomed back into the spotlight today.

A new dispute between Athens and her creditors is holding up the disbursement of Greece’s next aid tranche, worth €2bn.

Athens spent last weekend in a fevered attempt to persuade its creditors that it has met the terms agreed last summer, to qualify for the much-needed cash.

But it appears that lenders aren’t convinced, meaning that the payment won’t be signed off when eurogroup ministers meet in Brussels at 2pm today for a Eurogroup meeting.

The two sides are still arguing over new laws to repossess houses from people who are deep in arrears on their mortgage payments.

Athens is trying to dilute the terms agreed in July’s bailout deal, but eurozone creditors are sticking to their guns. They insist that Greek residences valued above €120,000 should be covered by the foreclosure laws, down from the current level of €200,000.

The Kathimerini newspaper explains:

The key stumbling block is primary residence foreclosures.

Greece has put forward stricter criteria that protects 60 percent of homeowners, while suggesting that this is then gradually reduced over the next years.

With a deal unlikely today, officials are now racing to get an agreement within 48 hours or so:

Greece told to break bailout deadlock by Wednesday

And Greece certainly needs the money, to settle overdue payments owed to hundreds of government suppliers who have been squeezed badly this year.


The Agenda: Markets see Fed hike looming

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Across the globe, investors are finally facing the prospect that the long run of record low interest rates is ending, at least in America.

There’s now a 70% chance that the US Federal Reserve hikes borrowing costs in next month’s meeting, according to this morning’s data.

This follows Friday’s strong US jobs report, which show 271,000 new positions created last month. With earnings rising too, Fed doves will probably be tempted to finally press the rate hike button at December’s meeting.

That is pushing up the dollar this morning, and weakening the euro. That will please the European Central Bank, as it ponders whether to launch its own new stimulus measures.

European stock markets are expected to inch higher at the open:

Also coming up….

  • The OECD will issue new economic forecasts at 10.30am GMT.
  • Britain’s business leaders are gathering in London for the CBI’s latest conference. The event is dominated by the UK’s “Brexit” referendum, and claims that the CBI is too pro-EU.
  • Eurozone finance ministers are holding a eurogroup meeting in Brussels this afternoon.

And there is fresh drama in the eurozone.

In Portugal, three left-wing parties have agreed to work together in a new “anti-austerity government”.

That will bring down minority administration created by Pedro Passos Coelho two weeks ago, after October’s inconclusive election.

And with Greece struggling to implement its own austerity measures, Europe’s problems are pushing up the agenda again.

We’ll be covering all the main events through the day….

Updated © Guardian News & Media Limited 2010

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Kristin Forbes, a member of the Bank of England Monetary Policy Committee, signals she may vote for an interest rate hike on the back of recovering UK economy by downplaying potential fallout for UK from emerging markets slowdown…


Powered by article titled “Bank of England policymaker says rate rise will come sooner, not later” was written by Katie Allen, for on Friday 16th October 2015 13.06 UTC

An interest rate hike in the UK will come “sooner rather than later” and pessimism about the state of the global economy is overdone, according to a Bank of England policymaker.

Kristin Forbes, a member of the bank’s rate-setting monetary policy committee (MPC), was also upbeat about the domestic economy. She argued that the country had only limited exposure to emerging markets such as Russia and Brazil and that, despite signs of a slowdown in those markets, British businesses should not be deterred from building stronger links with them.

Forbes’s intervention, against the backdrop of a recovering UK economy, indicated that she is preparing to vote for rates to be raised from their current record low of 0.5%.

“Despite the doom and gloom sentiment, the news on the international economy has not caused me to adjust my prior expectations that the next move in UK interest rates will be up and that it will occur sooner rather than later,” she said in a speech on Friday.

Forbes conceded that if some of the potential risks to emerging markets play out – such as a sharper than expected slowdown – “then the UK economy is unlikely to be immune”. But she said the UK’s exposure “appears manageable”.

Her comments align her with fellow rate-setter Ian McCafferty, who has voted for higher rates at recent policy meetings, where the MPC has split 8-1 at recent gatherings in favour of holding rates steady. But the Bank’s chief economist, Andy Haldane, said last month that rates may have to be cut further given signs of a slowdown in the UK and risks to the global economy from China.

The newest member of the nine-person MPC, Jan Vlieghe, also left the door open to an interest rate cut this week when questioned by MPs. Highlighting low inflation, Vlieghe told parliament’s Treasury committee that there was an option to cut rates but that the next move was “more likely to be up than down”.

Forbes, a US economics professor, said that on emerging markets, “recent negative headlines merit a closer look”.

“After considering the actual data and differences across countries, the actual news for this group is much more balanced (albeit not all bright),” she said in her speech, entitled “growing your business in the global economy: Not all doom and gloom”.

She was speaking a week after the International Monetary Fund warned central bankers that the world economy risks another crash unless they continue to support growth with low interest rates.

Forbes referred to the IMF’s latest downgrade to global growth prospects but noted that the fund had left its China forecasts unchanged. The data from China “has not yet weakened by anything close to what the gloomy headlines imply”, she added.

More broadly, she felt the global outlook was also better than headlines suggested.

“Although the risks and uncertainties in the global economy have increased, the widespread pessimism is overstated,” Forbes said.

She told business leaders that they should not be deterred from trading with emerging markets by the recent negative news, which “should prove temporary”.

“UK companies – as a whole – have been slow to expand into emerging markets. This may provide some stability over the next few months if the heightened risks in some of these countries become reality. But when viewed over a longer perspective, this limited exposure to emerging markets has caused the UK to miss out on growth opportunities in the past,” Forbes said.

UK interest rates were slashed to shore up the economy during the global financial crisis and they have stayed at a record low for more than six years. With inflation below zero and headwinds from overseas, economists do not expect a rate hike until well into next year.

In the US, interest rates are also at a record low of near-zero. Policymakers had been signalling they could start hiking last month but then worries about China’s downturn prompted them to wait. Still, the Federal Reserve chair, Janet Yellen, recently said the current global weakness will not be “significant” enough to alter the central bank’s plans to raise rates by December.

Forbes was also optimistic that the UK could weather the turmoil and said its domestic-led expansion “shows all signs of continuing, even if at a more moderate pace than in the earlier stages of the recovery.””

Howard Archer, an economist at the consultancy IHS Global Insight, said Forbes’ remarks reinforced the picture of a wide range of views on the rate-setting committee.

“The current wide range of differing views within the MPC highlights just how uncertain the outlook for UK interest rates is – although it still seems to be very much a question of when will the Bank of England start to raise interest rates rather than will they,” he said. © Guardian News & Media Limited 2010

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