Forex Fundamental Analysis

Rumours continue to persist that suggest that the Eurozone may be forced into some form of break-up. However, rather like mixing yellow and red paint to get an orange colour, the reality is it would be almost impossible to undo this integration.

The Irish government has outlined the austerity plans that it hopes will bring the nation’s deficit back under control by 2014. The Irish crisis has been triggered by a meltdown in the property market which has seen as much as 60% lopped off the value of properties.

Over recent months, the majority of economic indicators have suggested that the US economy was slowing.

Despite protestations that the Irish government did not need to call on the EU and IMF to provide a bailout to ensure that the nation could meet its debt obligations, the Irish bowed to the inevitable at the weekend and have formally requested EU help.

It was a mixed week for the world’s major stock exchanges last week. In Europe over the course of the week, the FTSE shed 1.1%, closing at 5732.8; the Dax put on 1.6%, ending the week at 6843.6; the CAC also rose by 0.76% to end the session at 3860.2.

Whilst markets wait to see if the Irish government will accept an EU bailout to defuse their sovereign debt crisis, the Greeks, who were the trigger for the first sovereign debt crisis in the spring, have announced more austerity measures.

Figures released for Chinese inflation for October have revealed that the general rate is 4.4%. The level has been high enough to trigger rumours that the Bank of China will be forced to raise interest rates.

The Euro has been forced lower in recent days because of persistent market doubts about the ability of the Eurozone member Ireland to service its debts

It had been widely expected that Japan’s economic growth would have continued to slow in Q3, possibly even retreating back into a contraction.

With the exception of the Nikkei, all of the world’s major stock exchanges closed lower last week. In Europe over the course of the week, the FTSE shed 1.3%, closing at 5796.9; the Dax fell by 0.29%, ending the week at 6734.6; the CAC dropped by 2.2% to end the session at 3831.

Germany is traditionally seen as the power house economy of Europe. So, the fact the Q3 GDP figures show that the German economy has slowed down is likely to increase the pressure on the Euro.

In a rare piece of analysis which nobody will challenge, the Bank of England pronounced that the outlook for the UK economy remains uncertain.

Hot on the heels of the widely criticised US move to embark on a further round of Quantitative Easing (QE), the Chinese have announced a $27 billion trade surplus, based on strong export performance.

The Federal Reserve announced last week that it would inject $600 billion into the US economy by June 2011. The idea is that the money will be used to buy long-date government debt through US banks

All of the world’s major stock exchanges closed higher last week after the Federal Reserve decision for a further round of quantitative easing.