[B]Weekly Bank Research Center 6-18-07[/B]
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[B] USD to Reassert; Non G-4 Currencies to Shine
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[/B] [/B] [I][I] Stephen Roach, Head Economist, Morgan Stanley [/I] [/I]
We are refreshing our currency forecasts. While keeping our view on EUR/USD and USD/JPY essentially unchanged (EUR/USD to trade below 1.30 and USD/JPY to eventually break lower in 2008, conditional on several assumptions), we are revising up our forecasts for the commodity currencies (AUD, NZD and CAD). We believe that the global economy will continue to benefit from trade and financial globalisation. While there may be sporadic inflation scares, we foresee an essentially Goldilocks-like? global environment. As a result, we expect risk-taking to resume after the bond markets stabilise, and continue to believe that emerging markets (EM) should, in general, be well placed to outperform.
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[B] [B][B][B] [B] BoE minutes in focus: did any MPC member vote for higher rates?
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[/B] [/B] [I] Trevor Williams, Chief Economist at Lloyds TSB Financial Markets [/I]
The minutes of the June BoE interest rate meeting are due on Wednesday and will be the focus this week in the UK as financial markets continue to debate the likelihood of another rise in base rates this summer. M4 money supply, mortgage lending data and an update on public finances are due on Wednesday. The latest CBI industrial trends survey will be published on Thursday.
[B] [B][B][B] [B] Economics Group Monthly Outlook
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[/B] [/B] [I][I]John E. Silvia, Ph.D. Chief Economist, Wachovia[/I] [/I]
Economic growth is now widely expected to bounce back solidly from the tepid 0.6 percent pace posted during the first quarter. A consensus seems to be building around real GDP growth rising in the 3 percent range during the current quarter. We see economic activity expanding at a slightly faster rate, with output climbing at a 3.5 percent pace.
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[B] Euroland Business Confidence Close to Bottoming in June
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[/B] [/B] [I] Niels-Henrik Bjørn Sørensen, Senior Analyst, Danske Bank
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Since last summer there has been a slight downward tendency in business confidence in Euroland, driven primarily by the slowdown in global industry. While global industry is now moving up in gear, as is clear in China and the US, it is not certain that Euroland has bottomed out yet. Some estimates suggest that Ger-man stock levels rose strongly at the beginning of the year, probably as a result of the slowdown in con-sumption in Q1 not having an impact on production. We therefore anticipate another month of gently dwin-dling business confidence.
[B] [B][B][B] [B] Stage Set for 25bp Hike in Canadian Target Interest Rate Next Month
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[/B] [/B] [I] Steve Chan, Economist, TD Bank Financial Group [/I]
Economists aren?t so tech-savvy to think first of iPods when thinking about i? words. Safer bets, both at Scrabble and in anticipating what they mean, are the less hip but nonetheless oh so important words like inflation or intervention. Following the Reserve Bank of New Zealand?s intervention to help take some steam out of its currency by selling some NZ dollar reserves, this i? word prompted some chatter about whether the Bank of Canada (BoC) would view the recent surge in the Canadian dollar as diminishing the need for an interest rate hike. The currency might be on the radar, but it isn?t the primary concern of an inflation-targeting central bank like the BoC, and rightly so.
[B] [B][B][B] [B] Other Pre-screened Independent Contributors[/B]
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[/B] [/B] [I] J-Chart [/I]
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