Forex Fundamental Analysis

UK inflation currently stands well above its 2% target rate which means that the Governor of the Bank of England, Mervyn King, will have to write to the chancellor to explain why.

Growth within the Eurozone in the final quarter of 2010 came in at 0.3% which was slightly under the figure that many analysts had predicted. The zone posted a full year growth figure of 1.7% which matched the level seen in the wider European Union.

The writing has been on the wall for a long time, but economic output figures finally show that China has eclipsed Japan as the world’s second largest economy behind the USA. Japan had held onto the number two spot for more than four decades. Japanese economic output came in at $5.47 trillion last year whereas the Chinese figure was $5.8 trillion.

Last week saw all of the world’s major stock markets close higher for a second consecutive week. In Europe over the course of the week, the FTSE gained 1.1%, closing at 6062.9; the Dax put on 2.2% to close at 7371.2; the CAC rose by 1.3% to end the session at 4101.3.

A fresh wave of concern over Portugal’s ability to meet its debt obligations has pushed bond yields higher and the Euro lower.

Federal Reserve Chairman, Ben Bernanke, has warned that US unemployment is likely to remain at a high level for several years to come. US unemployment remains at 9% and has improved over the past 2 months.

Japan is still struggling with deflation where prices for some goods decline with time. This means that consumers delay making larger purchases for as long as possible in the knowledge that the goods will be cheaper when they eventually buy them.

There was a time that if you didn't have a job and you wanted one, you were considered to be unemployed and were duly recorded in the unemployment statistics.

Last week was the final trading session of the month. It saw all of the world's major stock markets close higher. In Europe over the course of the week, the FTSE gained 2%, closing at 5997.4, but it ended January down by 0.37.

The European Central Bank has decided to maintain interest rates at their historic low level of 1% for a further month. The rate has been on hold now for 21 months.

The UK economy suffered a surprise contraction in the final quarter of 2010, shrinking by 0.5%. If the Q1 2011 data follows suit, then the UK will have entered recession and the “double-dip” doomsayers will be proven correct.

Within the 17 nations that make up the Eurozone (Estonia joined the single European currency at the start of the year), unemployment remained unaltered at 10% in December.

As the world's largest economy, the US domestic market is one that warrants frequent attention. Some 70% of US economic activity supports domestic demand which explains why a near 10% unemployment rate within the USA is a cause of great concern.

Last week was saw most of the world’s major stock markets close lower. Only the Nikkei and Dax managed to close up.

Moody’s is one of the biggest credit ratings agencies in the world. In essence, the function of a ratings agency is to provide impartial advice on the risk associated with investing in a specific bond issue, in terms of an investment grade status with AAA being the best possible.