Financial Outlook by Lloyds TSB

Financial markets activity remains strong, with the dollar seemingly the focus of a lot of the selling part of this activity.

Summary of main changes to exchange & interest rate forecasts

Financial markets activity remains strong, with the dollar seemingly the focus of a lot of the selling part of this activity. But underlying the dollar focus are a lot of expectations that, if proved incorrect, could mean renewed levels of activity into the year ahead, and some reversal of recent trends. Although global economic growth is recovering from the worst downturn in 60 years, the recovery has been patchy so far and slower to appear in some countries than others. It is these trends that party explain why the US dollar is so weak, as the US is lagging the economic recovery and emerging markets are leading it. But this is not the whole story: global economic imbalances built up during the period of fast global growth between 2002 and 2007 are also unwinding.

Full Report