Non-commercial investors turn marginally long EUR

- "The latest IMM data cover the week from 14 to 21 September."
- "JPY longs remained in place after the BoJ intervention: The intervention from Bank of Japan that sent USD/JPY from 83 to almost 86 was not enough to square long JPY positions. IMM data show that speculative JPY net longs remained in place last week, reaching 20 percent of open interest. The market looks increasingly likely to re-test the central bank as USD/JPY is gaining downside momentum."
- "Non-commercial investors turn marginally long EUR: For the first time since December last year speculative investors are net long the euro. Net long positions have reached 3 percent of open interest, as improved risk sentiment - and increased concerns about the potential effect of QEII on the dollar – has sent EUR/USD higher to trade near 1.35. IMM data indicate that there is plenty of room for a further build-up in EUR longs, although we suspect that investors will be cautious adding too much EUR exposure as long as Euroland debt uncertainties remain high."
- "Commodity currencies still vulnerable to position squaring: September’s risk rally, which has seen the S&P500 index gain almost 10%, has coincided with a further build-up of long positions in the commodity currencies. Net longs are now at 69 percent in NZD, 50 percent in AUD, and 29 percent in CAD – indicating that these high beta currencies are becoming increasingly vulnerable to a potential position unwind. A trigger for this could be a sell-off on the stock market, which our equity analysts see a high risk of over the coming months."

Moving closer to QEII

- Market Movers ahead
• "We expect the US ISM to decline to 54.5 after the surprise increase in August."
• "In Euroland, PIIGS will probably remain on the radar screen. On the data front, focus will be on inflation."
• "In Asia, the release of China’s two manufacturing PMIs and Japan’s Tankan will be in focus. We expect a confirmation that the Chinese economy is currently bottoming out and a gain in the Tankan index for Japan’s large manufacturers."
• "A lot of data out of Sweden including retail sales, PMIs and the NIER surveys."
• "In Norway particularly credit growth and retail sales should attract attention."
- Global Update
• "The FOMC statement struck a more dovish tone than expected. We now see a new round of quantitative easing as the most likely outcome."
• "In the Euro area, focus has centred on Ireland and worries about the costs associated with restructuring in the banking sector."
• "The global slowdown is now being felt in the manufacturing sector in core Euro area countries. German PMI and Ifo expectations posted declines."
• "Tensions between the US and China have intensified. The US is unhappy about the slow appreciation of the yuan."
• "In Japan, the prospects of new quantitative easing in the US has led to a stronger JPY. This puts pressure on both the BoJ and the Ministry of Finance."
- Focus
• "In this week’s focus article we take a closer look at Danish house prices. Prices are currently in line with the level predicted by our fundamental model. This is however all due to the historically low level of interest rates." 

Rates firmly on hold everywhere

- Market movers ahead: Rate decision and PMI in focus "We have four rate decisions in the coming week - in Romania, Hungary, Poland and Russia – and the outcome is likely to be the same everywhere; unchanged rates and little variation in rhetoric from any of the central banks. PMI for September due for release next week across the EMEA region will provide an indication of how well EMEA economies are doing. Overall, we expect EMEA PMIs to follow the global trend and to decline somewhat in September, but in general remain above the critical 50 level, indicating continued expansion in EMEA economies. Still, PMIs in several countries will fall fairly close to 50."
- Fixed income outlook: Downside potential for Polish bond yields "Polish Minutes published this week showed some MPC members advocated a 50bp rate hike at the August meeting. Still, interest rates remained on hold in August (absent majority support to hike) and will continue unchanged at next week’s MPC meeting as well. Nevertheless, many market participants expect the Polish central bank to deliver its first rate hike soon although we do not believe it will do so until Q1 next year at the very earliest given the continued benign inflation outlook. Based on our “dovish” outlook for Polish monetary policy for both the next 3-4 months and 2-3 years, we see further downside potential for Polish bond yields."
- Scorecard-based trade of the week: buy ILS/ZAR "For the sixth consecutive week, the highest-scoring currency in our EMEA FX Scorecard is the Israeli shekel, and the lowest-scoring the South African rand. We therefore continue to recommend buying ILS/ZAR based on our EMEA FX Scorecard."

Slowdown, but with a soft landing

- Short view: Weaker growth for longer "Commodities witnessed a pronounced sell-off in late August led by disappointing economic data. However, since then, prices of most products have risen despite little improvement in fundamentals. Volatility will probably remain high in H2, but heading into 2011 the prices of oil and base metals should gradually start to move higher as the business cycle matures and a soft landing on the back of the current mid-cycle slowdown is eventually confirmed."
- Energy: Soft patch ahead "Weakness is materialising in the oil market with both OECD and non-OECD demand softening. Due to lower GDP projections, we have taken down our forecasts for oil consumption in 2010 and introduce cautiously optimistic 2011 estimates. We now see stocks building for this year on average and postpone our call for a decline in world oil inventories to 2011. The OPEC October meeting will focus on quota compliance."
- Base metals: Still risk of a correction "Declines in global PMIs during the autumn should prove challenging for base metals. Notwithstanding, we continue to see the direction as being upwards and recommend buyers take advantage of almost inevitable price setbacks over the next couple of months to position for higher 2011 levels, especially for copper."
- Grains: Focus on tightness in corn "Wheat has showed continued strength but attention is shifting to corn, the market for which is growing increasingly tight. The projected output shortfalls for this year are unlikely to change the outlook for near-record harvests of most grains, but with demand simultaneously rising, stocks-to-use ratios are declining to less comfortable levels."
- Hedging: Consumers should await correction "We suggest consumers await setbacks in metals, crude oil and crack spreads for distillates before locking in 2011 prices for e.g. diesel."

September 2010: Economic slowdown confirmed, event risks ahead

- "We expect EUR/USD to trade in limbo in the absence of a clear trend in relative rates over the next half year year. Beyond this, we continue to find more dollar negative factors and expect EUR/USD to head moderately higher."
- "We see only limited downside potential for USD/JPY after BoJ's intervention. USD/JPY can stay subdued for a while though with China buying JGBs. USD/JPY belongs in the 90-100 though."
- "The pound is in our view overbought according to short-term financial factors and we forecast EUR/GBP slightly higher on 3-6 months. Sterling weakness will, however, be limited by the stronger dollar. GBP is undervalued from long-term estimates though and EUR/GBP can eventually break below 0.80."
- "We expect the CHF to stay strong over the next half year, backed by sound Swiss data and the outlook of higher rates. EUR/CHF will rise when ECB sharpens rhetoric and EUR risks gradually diminishes."
- "We maintain our positive views on the Scandies and foresee lower levels in both EUR/SEK and EUR/NOK over the coming quarters. Risk-reward has been better though and both can be subject to a sell-off if risk appetite disappears from markets again."
- "We expect to see EUR/DKK trading in a narrow range and the Danish Central Bank to actively monitor the krone. Normalisation of rates can occur in the latter part of our forecast horizon."
- "We like AUD and NZD for now but acknowledge that both are trading at overvalued levels."

NZD longs approaching previous highs

- "The latest IMM data covers the week from 7 to 14 September."
- "NZD longs approaching previous highs: When IMM data was collected on 14 September NZD/USD reached a 0.7395 high – this after money markets had begun pricing in monetary policy tightening again (the OIS market is now pricing 65 basis points in 12M compared with 43bp ultimo August). With NZD longs being added and shorts broadly unchanged, net long NZD positions have reached 65% of open interest. Hence, downside risks are building for NZD/USD."
- "Too little fundamental difference to see a position build-up in EUR/USD: Since the massive EUR shorts – added during the Spring Euroland fiscal crisis – were unwound during July, positioning has been fairly neutral. With upward pressure having built up in EUR/USD, shorts have been scaled back further. Net short EUR positions currently stand at just 6% of open interest – indicating limited risks from positioning."
- "IMM data collected prior to Bank of Japan intervention: The latest positioning data was collected the day before the Bank of Japan (BoJ) stepped in and intervened in the currency market for the first time since 2004. According to the IMM data, speculative investors were significantly long in JPY prior to the intervention, which helps explain its ‘success’. With the market likely to be less long in JPY now, it will – all other things being equal – be more difficult for the BoJ to prevent JPY appreciation."

No near-term rate hike from the CNB

- Market movers ahead: A couple of strong Polish releases are due next week "Next week’s calendar is very light. The most interesting items on the agenda are likely to be a number of Polish economic releases due on Tuesday and Friday, which should all show positive signs for the Polish economy. Polish core inflation should confirm the fact that inflationary pressure is still not an issue in Poland. We expect core inflation to remain unchanged at 1.2% y/y in August. On Friday we expect data on Polish retail sales to come out on the positive side, increasing to 4.5% y/y in August compared with 3.9% y/y in July. Also due on Thursday is the rate decision in the Czech Republic and minutes from the latest monetary policy meeting in Poland."
- Fixed income outlook: CNB rate decision "On Thursday next week the Czech central bank (CNB) has its rate setting meeting. We do not expect this to be a major event as we expect the CNB to keep its key policy rate unchanged at an historical low of 0.75%. Overall, we expect the CNB to maintain a rather neutral tone, as we do not see any changes to Czech monetary policy for some time."
- FX outlook: EUR/USD should set the tone "As the calendar does not hold many potential market movers we do not expect much activity on the EMEA FX markets in the coming week. The key driver could be a further move up in EUR/USD, which will be positive for the euro-sensitive CEE currencies."
- Scorecard-based trade of the week: buy ILS/ZAR "For the fifth week in a row, the highest-scoring currency in our EMEA FX Scorecard is the Israeli shekel, while the lowest-scoring is the South African rand. Therefore, we continue to recommend buying ILS/ZAR, based on our EMEA FX Scorecard."

Basel III rules on minimum capital ratios announced

- "The release of the Basel III rules on new minimum capital requirements was the dominating news in the credit market this week. The rules were slightly less tough than was stated in press reports last week and consequently financial spreads performed well. Of particular interest to the subordinated debt market is the transition rules concerning bank capital. Essentially, extension risk has been reduced for hybrids – especially those with step-up coupon features – and on the back of this we saw a massive rally in the Tier 1 market. The rally was partly halted after the market became aware of certain possibilities for some issuers to make calls of outstanding bonds by 2013 in case these bonds no longer qualify as regulatory capital. This was particularly the case for highcoupon bonds trading above par. For a further description of the new rules, see below."
- "On the back of the confusion on whether to call or not to call hybrids and at what date, it seems that Abbey (owned by Banco Santander) is not calling an outstanding UT2. We think that ongoing uncertainty over how to design subordinated debt instruments such that they comply with Basel III requirements will make issuance limited in the short term. Against this background, it is perhaps not surprising that some banks opt not to call outstanding sub debt, as the ability to substitute it is uncertain. Therefore, in our view it is possible that more banks will follow in the footsteps of Santander (which is one of the major market players, after all), especially on UT2 instruments where there is no amortisation of capital after the first call date."

Intervention and regulation

- Market Movers ahead 

• "In the US, the FOMC meeting is expected to largely maintain the status quo. The economy has not worsened enough for additional quantitative easing (QE)."

• "In Europe, PMIs and the German Ifo are poised to disappoint, suggesting growth is now easing."

• "In Asia, attention will be on possible further intervention from Japan. Japan could face criticism when global leaders gather for the UN meeting in New York."

• "We expect Norges Bank to keep interest rates unchanged at this week‟s meeting, but suspect the statement will be a bit more hawkish."
- Global update 

• "Japan intervened for the first time since 2004 and has so far been successful in stemming the appreciation of the yen." 

• "The Basel III proposal has eased fears that it forced banks to rush to raise capital and weigh on the global recovery." 

• "Encouraging data in the US and China ease fears of a double dip." 

• "However, data from Europe have been disappointing suggesting that growth is now slowing."
- Focus 

• "In the first Focus article, we look at leading indicators ability to predict G10 exchange rate movements. Our conclusion is that to some degree they can." 

• "In the second Focus article, we look closer at the sustainability of public finances in the US. Our conclusion is that fiscal tightening is needed but at this stage it is not urgent."

FX: Risk on, risk off, risk on, risk off.../Rates and yields: strong rand pushes down South African yields

- FX: Risk on, risk off, risk on, risk off... "Emerging Markets FX markets have been relatively directionless the over the past week, with about half of the EM currencies that we cover appreciating against EUR and USD and the other half depreciating. The overall theme has no doubt been whether the G3 economies are heading for a double-dip or whether the global recovery will continue. Lacking a decisive answer to this key question, the EM FX markets have mostly drifted sideways."

- Rates and yields: strong rand pushes down South African yields "It has also been remarkably calm in the EM fixed income markets. The most interesting “story” has certainly been the decline in South African yields, which have been driven down by the continued strengthening of the rand. That said, we do not see much potential for South African yields to fall further."

Economic slowdown confirmed: now what?

- "The global mid-cycle slowdown that we introduced in our previous Forecast Update has materialised further, but without pushing the pro-cyclical currencies lower. The slowdown is already priced in markets and if the outlook doesn’t deteriorate further, we don’t think the ‘smaller’ G10 currencies will lose ground against the ‘larger’ ones."
- "Risk sentiment remains an important – but rather unpredictable – driver to our forecasts and we regard financial markets as closely interlinked across asset classes. We recommend to consider a higher-than-normal degree of FX hedging."
- "We see both downside and upside risks to EUR/USD and foresee a bumpy ride around the current spot level with a moderate upward bias on the longer horizon as the most likely. We think the BoJ will prevent JPY from drifting much stronger in the short run and keep our bias for weaker yen in the long run. We remain positive on the Scandinavian currencies but acknowledge that levels may seem stretched and that risk-reward has been better."

No bond market bubble

- Recent market movements "Bond yields are trading roughly in line with the forecast we released a month ago. However, this hides a decline in the second half of August which has reversed in September. Changes in the market’s perception of double dip risks have been the key driver of yield movements. As such, the yield increase in recent weeks has been driven by slightly better indicators out of the US and Asia. Also, fluctuating demand from the European L&P industry has exacerbated yield movements. L&P companies were heavy buyers of bonds when yields declined but L&P bond purchases appear to have slowed a little as yields have moved higher. Illustrating this is the fact that yields in the 30Y segment saw the steepest fall when yields declined in August but have rebounded the most in recent weeks."
- Macroeconomic outlook "Economic indicators out of the US have surprised on the downside in recent months, although the past few weeks have seen a few positive surprises. Leading indicators are generally pointing towards a sharper slowdown, and in the past month we have downgraded our US growth forecast by almost one percentage point. We expect the US economy to grow 1½-2% in H2 10 and then to recover slowly to a 3% growth rate. Manufacturing ISM is expected to decline to the 50-51 region by the end of 2010. Payroll gains, which are generally very important for bond markets, are expected to average around 100,000 a month in the coming quarters, rising towards 200,000 by the end of 2011. All things considered, we do not expect a double dip in the US economy but the weakening of ISM data over the next 3-6 months should keep double dip fears alive. In the eurozone the news flow has been more positive in recent months, but we see increasing signs of growth losing momentum. German industrial orders and eurozone industrial production have remained flat for a couple of months, and the OECD leading indicator for the eurozone is still pointing downwards. We believe that GDP growth peaked in Q2 at about 4% q/q AR and we expect it to slow gradually to 2% q/q AR in 2011. Activity indicators such as the German IFO and eurozone PMI are set to decline in the coming quarters. We continue to expect very divided growth within the eurozone, with Germany outperforming while growth momentum remains subdued in southern Europe. Inflation is not giving much cause for concern. Core inflation in the US is running at a very low rate of 1%. In Euroland the inflation rate appears to have stabilised at roughly 1.5% in the eurozone and we expect it to remain there over the next 12 months."

Between a rock and a hard place

- "The euro area posted strong growth in Q2, but there are signs that the slowdown in the US and Asia is now beginning to be a drag on euro area growth. We project a slowdown with growth just below trend in the coming quarter."
- "Internal demand has started to gain strength, which makes the recovery less dependent on the pull from export markets. However, the recovery is not fully sustainable until we see declining unemployment and a stronger recovery in private consumption."
- "The unemployment rate has been stable at 10.0% since March. We project that unemployment will begin to decline soon albeit slowly, but this result is very sensitive to developments in labour-intensive sectors, such as construction."
- "The southern European debt crisis is not all over. Lower growth and higher spreads make a harmful cocktail. Targets are still achievable, but depend on reform willingness. Our primary concern is that public support for necessary reforms may falter."
- "The ECB is taking a pause on the exit path. The risk of an economic downturn has increased and the monetary analysis, which shows that loan flows have turned softer in recent months, does not support a more hawkish stance. We expect a first ECB hike in Q4 2011."

Slowdown, but no recession

- "The switch from an inventory-stimulus driven recovery to a demand driven recovery has proved tougher than expected, as job and spending dynamics remain weak."
- "In the coming quarters, growth will remain below par as the manufacturing cycle will slow and fiscal tightening will provide headwinds to final demand. However, the risk of recession is limited."
- "Economic growth will return to an above trend pace in 2011. Easy financial conditions, easier access to credit and pent-up demand will help the needed rotation towards more demand-driven growth."
- "Core inflation is expected to slow toward 0.5%, while headline inflation will move back into the 1.5-2% range. The risk of outright deflation remains relatively low."
- "Fed hikes have been postponed to H1 12 and the softer outlook increases the possibility of further Fed easing. Currently, we attach a 40% probability to the Fed resuming large scale asset purchases."

The outlook for US government debt

- "US net debt has risen fast during the recent recession, to more than 60% of GDP from 36% in 2007. Compared with other OECD countries however, this level is not alarming. Rather, it is the outlook for US debt over the next decade and beyond that is worrying." 

- "Under the President’s current budget proposal the budget will be in continuing deficit throughout the next decade. This will push net debt to 90% of GDP by 2020. Additional fiscal tightening is thus needed to stabilise debt." 

- "The scope for additional fiscal tightening is limited in the short term and largest beyond 2014. A broadly growth-neutral fiscal policy from 2014 onwards would be enough to bring net debt to 60% of GDP by 2020."

China appears to be regaining strength

- "On Saturday China released economic data for August which exceeded expectations across the board. While GDP growth could still slow to below 7% q/q AR in Q3, the data released on Saturday suggest the Chinese economy is now bottoming out and is poised to improve in Q4."

- "In Q2 and Q3 growth has been pulled lower mainly by weaker construction activity and inventory cuts. We expect construction activity growth to remain substantially below trend well into 2011 as fiscal stimulus gradually unwinds. Private consumption increasingly looks like China’s new growth engine, although demand for consumer durables has temporarily slowed following the explosive growth last year. Inventory cuts are easing and this should add to growth in the coming quarters." 

- "Export growth has so far been resilient and China’s trade surplus has again improved above USD20bn on a monthly basis. However, we expect the trade surplus to decline in the coming quarters as exports to Europe and the US lose some momentum and China’s import growth improves." 

- "The impact on the property market from the government’s regulatory tightening now seems to have been less than expected. House sales started to recover in August and the expected large drop in property prices has so far failed to materialize." 

- "We do not find the increase in inflation in August from 3.3% y/y to 3.5% y/y alarming. With GDP growth currently below trend, inflationary pressure is easing; we expect inflation to peak in September and decline close to the government’s 3% target by the end of the year." 

- "The Chinese economy currently appears to be very close to where the Chinese government wants it. Hence, we do not expect any major policy adjustments this year. However, we still believe China is in a tightening cycle and, while interest rate hikes are probably off the table for the rest of this year, further regulatory tightening targeting the property sector looks increasingly likely." 

- "This latest economic news has made us more confident that China remains in a tightening cycle. In addition, exports have remained resilient, the trade surplus has improved and the effective CNY exchange rate has actually depreciated since China formally abolished the USD peg in July. With the political focus in the US returning to China’s exchange rate policy, we still expect CNY to appreciate." 

- "While, alone, signs of a soft landing in China should be reassuring for commodity markets, it is important to stress that the composition of Chinese growth now is less commodity friendly, because construction (and temporarily durable consumer goods) is growing below trend."

On a knife’s edge

- "A flow of disappointing news – particularly in the US – has led us to revise down our global growth expectations. Focus will probably continue to be on the US where the economy is expected to balance on a knife’s edge between recovery and another downturn. Double-dip fears are likely to be an ongoing theme for some time."
- "We now have below-consensus forecasts for US growth at 2.6% and 2.3% for 2010 and 2011 respectively – a downward revision of around one percentage point in both years compared with our June forecasts. We look for the economy to grow by 1.5-2.0% in H2 10 before recovering gradually during 2011. The main risk is that the economy gets stuck at a low growth level. We see the risk of a new recession as very low."
- "In Euroland, activity surprised strongly on the upside in Q2 10, leading to an upward revision of our 2010 growth expectations. We have probably seen the peak, though, and we see the economy growing more in line with the long-term trend at around 2% in 2011 as the export engine loses some steam. Our forecasts for Euroland continue to be above consensus."
- "The Asian economy surprised on the downside during the spring, leading to a downward revision of our growth expectations for 2010. However, we expect Asia to recover during the coming quarters."
- "Inflation is expected to remain subdued and policymakers in G3 will continue to focus on supporting growth. We see a 40% probability that the Fed will start another round of quantitative easing (QEII). The ECB is expected to keep rates on hold throughout most of 2011. Chinese policymakers are sidelined but we expect tightening to resume in 2011."

Investors rush into AUD on buoyant economic data

- "The latest IMM data cover the week from 31 August to 7 September."
- "Positioning becoming an increasing risk to AUD: The Australian dollar has rallied almost 5% against USD since GDP data published on 1 September showed that the Australian economy re-accelerated during Q2. The strong activity data, combined with further employment growth, have also seen the money market turn from pricing a small probability of a cut to now pricing a full 25bp hike in 12 months. As a result, noncommercial investors have added to AUD longs, which now stand at 44 percent of open interest. Hence, positioning is increasingly becoming a downside risk to AUD."
- "Close to neutral positioning in EUR/USD: With EUR/USD stuck in an approximate 1.26-1.29 range since the middle of August it is little surprise that non-commercial investors have refrained from taking a strong directional view. Net short EUR positions stand at 9.2 percent of open interest, down from 10.6 percent the week prior."
- "Short CAD positions are unwound: After having turned marginally short CAD two weeks ago speculative investors are now once again net long and long positions are likely to have been built further after the Bank of Canada hiked by 25bp the day after the IMM data was collected."

Turkish lira on the edge

- Market movers ahead: TCMB on hold, Polish inflation low "We do not expect any major change in rhetoric from the Turkish central bank (TCMB) when it announces its rate decision next week. Along with the market consensus, we expect the TCMB to keep rates on hold, with the borrowing rate staying at 6.50%. That said, the TCMB will keep all options open and, if anything, we would recommend investors to be positioned for more dovish rhetoric. Read more on page 4. Polish inflation and industrial production will be in focus next week. We expect inflation in August to surprise on the downside compared to the consensus and stay flat at 2.0% y/y (consensus sees a moderate increase to 2.1% y/y). We see industrial production surprising on the upside in August to grow by 15% y/y, up from July’s 10.3%."
- Fixed income outlook: CHF/HUF at 230 will trigger MNB hike "Hence, there is no doubt that the MNB is considering to hike interest rates despite the fact that inflationary pressures seem to be moderating and growth remains lacklustre. Judging from our Monetary Policy Tracker one should not really expect that kind of aggressive rate hikes that is now being priced in by the markets – as it confirms that inflationary pressures are easing which in itself is an argument for rate cuts. So why is the MNB considering rate hikes? And is it rational for the markets to speculate the MNB might hike rates? The most important reason is of course that the situation in Hungary in no way can be described as “normal” as concerns over financial sector stability continue to “overrule” everything else. Read more on pages 3-4."
- FX outlook: volatile week ahead for the lira "Next week could be something of a rollercoaster for the Turkish lira, with three big events on the agenda: the referendum on constitutional changes (Sunday 12 September), the Q2 GDP numbers (Tuesday) and the rate decision from the TCMB (Thursday)."
- Scorecard-based trade of the week: buy ILS/ZAR "For the fourth week in a row, the highest-scoring currency in our EMEA FX Scorecard is the Israeli shekel, while the lowest-scoring is the South African rand. Therefore we continue to recommend buying ILS/ZAR, based on our EMEA FX Scorecard."

Living on the edge

- Market Movers ahead
• "In the US focus will be on the August retail sales report and industrial activity indicators. We expect a positive surprise in retail sales."
• "In the euro area it will be a quiet week in terms of data, with the most interesting release being the German ZEW."
• "In Asia focus will be on developments in the yen, which has become a central theme in the leadership contest in the Democratic Party of Japan."
• "SNB is expected to keep rates on hold at the monetary policy meeting next week."
- Global Update
• "News out of Europe has been mixed. German industrial data disappointed and the German banking association said that Germany‟s 10 biggest banks may need EUR105bn of additional capital under Basel III rules."
• "This week offered further comfort in terms of better-than-expected US data from the labour market and from the trade balance."
• "In addition, Obama proposed further economic stimulus. In Japan focus is still on the strong yen and the possibility of Japanese intervention in the FX market to stem the appreciation. However, this issue has been complicated by increased Chinese buying of Japanese bonds."
• "In Sweden GDP data was revised substantially higher, but we continue to expect slower growth ahead."
- Focus
• "This week we published new global forecasts. A flow of disappointing news has led us to revise down our growth forecasts – in particular for the US."
• "While we see a limited risk of a recession, double-dip fears are likely to remain present for a while."