Forex Fundamental Analysis

The Global Recovery continues to be characterised as stuttering, but the underlying trend is positive. Confirmation of this situation has been provided by the latest Markit Composite Purchasing Manufacturer’s Index for the Eurozone.

Germans went to the polls in a general election on Sunday and delivered a third successive mandate to Chancellor Angela Merkel.

Last week saw all of the major markets close higher again, buoyed by the news that the Federal Reserve was not starting the “taper” just yet.

Long gone are the days when it seemed that the Irish economy could do no wrong, earning it the nickname of the Celtic Tiger. The Global Financial Crisis heralded the bursting of a property bubble in the Republic of Ireland which, in turn, nearly destroyed the banking sector.

The German economy is the largest in the 27 member European Union and business conditions within the nation are a barometer for the fortunes of both the EU and the Eurozone.

The two IMF/EU bailout loans that averted a major sovereign default and almost certain exit from the Euro were hardly an act of European altruism or solidarity.

Last week saw all of the major markets close higher on reduced geopolitical tensions over Syria and a putative agreement to put Syrian chemical weapons beyond use.

Excessive risk taking by the investment arms of major banks was blamed by some for contributing to the Global Financial Crisis.

Christine Lagarde, head of the International Monetary Fund (IMF) has adopted poetic language when talking of the Eurozone and urging European leaders to waste no time in completing moves towards banking union.

As we have noted before, the classic economic cycle is that recession is followed by recovery and as the recovery gains traction, strong job growth is seen as companies engage staff to meet resurgent demand.

Last week saw all of the major markets close higher on encouraging economic indicators and despite continuing geopolitical tensions over Syria and the response to its alleged use of chemical weapons.

With the demise of UK heavy industry in the 1980s, the service sector became the dominant sector of the UK economy and is responsible for the prosperity of the nation, or otherwise.

The genesis of the Global Financial Crisis was the realisation that many banks and financial institutions were heavily subscribed to sub-prime mortgages and consequently at great risk if borrowers defaulted.

Obviously, the order books of manufacturing businesses provide a good litmus test for the state of economic recovery since orders are only placed when absolutely necessary or in order to meet anticipated demand.

Earlier in the month, a manufacturing Purchasing Managers’ Index (PMI) produced by HSBC indicated that the sector had gathered momentum, easing fears of a slow-down in the world’s second largest economy.