Commenting further on the latest EC growth and inflation forecasts, [EC'S ALMUNIA] says there is no significant risk of the Eurozone enduring deflation, echoing recent comments made by various ECB officials as well as Pres Trichet. Almunia adds credit flows will not return to normal without further repair of banks' balance sheets with the Commission estimating that bank losses could be around Eur 200-400bn in 2009/10 (note 5-yr CDS blew out on this remark). He also suggests potential growth in the EU economy will be around 1% in the next two years, and significantly below its potential GDP of 2.25%. All said and done, we think the new forecasts suggesting growth of 0.7%/1.5% in 2010/2011 resp will lead to little inflation risk to trouble the ECB in the medium term. Furthermore, for the UK as well as the EU, we believe for a sustainable recovery to take hold a return to 'normal' credit flows will be essential.
[EUROPEAN FX MORNING ROUNDUP] US factory orders data to come. A 0.8%% m/m rebound is forecast in Sep but after yest's stellar data there is no guarantee that the numbers would be a spur for broader market risk.
[EUROPEAN FX MORNING ROUNDUP] US factory orders data to come. A 0.8%% m/m rebound is forecast in Sep but after yest's stellar data there is no guarantee that the numbers would be a spur for broader market risk.
those who can, do. those who cant, talk about those who can
