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Key News

Key Reports (WSJ):
8:30 a.m. Jan Trade Balance: Expected: -37.0B. Previous: -39.93B.
8:30 a.m. Feb Import Prices: Expected: -0.8%. Previous: -1.1%.
10:00 a.m. Mid-Mar Reuters/U Mich Sentiment Index: Expected: 56. Previous: 56.2.


“The problem is that conditions in the world economy today are what mathematicians call ‘path-dependent’. In a period of normal growth, it doesn’t matter whether there are some bumps in the road — for example, changes in government policy or delays in important announcements, such as the agreement to insure Lloyds Banking Group’s toxic assets. Like a cyclist with plenty of momentum, the economy just keeps on going. But when it is unstable, even a small change in external conditions can have a hugely amplified effect. Imagine a pencil balanced on its tip, for example; the tiniest wisp of a draft will determine which way it falls.

“It is this path-dependence that explains why real-world economists — as opposed to the Delphic oracles who merely repeat the same bullish or bearish pronouncements — have been lurching around so much in recent months. To see what I mean, consider the growth projections published on November 25 by the Organisation for Economic Co-operation and Development (OECD), the world’s pre-eminent forecasting institution. The OECD predicted that in the fourth quarter of 2008, GDP would fall by 2.8 per cent annualised in the US, by 2.1 per cent in Britain and by 1.0 per cent in the eurozone, Germany and Japan. Last week we learnt the actual figures: US GDP fell by 6.2 per cent annualised, Britain by 6 per cent, the eurozone by 6 per cent, Germany by 8.2 per cent and Japan by 12.8 per cent.”

                              Anatole Kalesky

FX Trading – Still about that risk aversion versus risk appetite theme
In currency trading today, ebb and flow from risk appetite to risk aversion still seems the key driver. 

We get a couple of key numbers this morning at 8:30 a.m. EST…stay tuned.

Have a great weekend.