Forex Fundamental Analysis

All things come to an end, eventually. At some stage, the Greek economy must “turn the corner”, “bottom out” or whatever. The effect of spending cuts, tax increases, social security reforms and relaxation of employment legislation will produce a time when the economy ceases to contract and returns to growth.

All of the major markets ended last week’s trading higher as a hint of optimism pervades the markets. Friday marked the last trading session for January from the perspective of these summaries, so we’ll see how kindly the month has treated the markets.

The major commodity that was suddenly in short supply as the world fell into its gravest financial crisis since the Great Depression was confidence. Confidence is an intangible beast which is essential to the operation of the capitalist machine.

The idea of raising an additional tax on financial transactions has been pushed, particularly by the French, as a mechanism of raising revenue from the financial sector which could be used to defray some of the costs of the European sovereign debt crisis.

One of the major challenges facing the world’s third largest economy, Japan, is deflation. Deflation has bedevilled Japan for most of the past 20 years; and so for most of this time, the Liberal Democratic Party which forms the newly elected government, has presided over it.

Economic models are tools that can be used to make predictions on the future direction of an economy, based on theory and fuelled with data from current economic performance.

With the exception of the Dax, all of the major markets ended last week’s trading higher. Get the fundamental analysis for the Forex week in review here.

As we reported last week, the issue of the UK’s relationship with the Eurozone (which, frankly, is the bit that counts most) and the wider EU is again the topic of conversation and speculation both within the UK and in the wider world.

According to a survey conducted by the Federal Reserve, US economic activity has strengthened since November. The report, “Summary of Commentary on Current Economic Conditions by Federal Reserve District” is an aggregate document from the 12 US reserve banks.

One thing that recent times have demonstrated is that most longer-term economic projections in the aftermath of the worst global recession since the Great Depression is that they are about as reliable as reading the tea leaves.

At the press conference which followed last week’s European Central Bank policy setting, Mario Draghi offered no hints of any additional forthcoming stimulus measures, which reassured market players’ speculation that the central bank felt that Eurozone’s economy was on track.

America narrowly avoided the so-called fiscal cliff with an extra time agreement to raise taxes on Americans with incomes above the $400000 mark.

Get last week's trading activities from a fundamental perspective here and see what may be in store for the currency and commodity markets this week.

The incoming Japanese administration, under Prime Minister Shinzo Abe, has just announced a further stimulus package worth approximately $116 billion.

British politics are rather rocky these days...see what may be coming up for the Pound and other currencies at DailyForex.com.