Forex Fundamental Analysis

In the last week, the Irish, the Portuguese, the Spanish and the Greeks have all issued government bonds, of varying duration, which have been enthusiastically swallowed up by the market.

The US Federal Reserve has decided not to take any action at the moment to stimulate the US economy, but has hinted that it may do so in the future.

The UK government will no doubt be delighted to learn that one of the biggest ratings agencies, Moody’s, says that the UK’s triple A status is secure on the back of the austerity measures that the coalition has put in place.

On the currency markets last week the Bank of Japan intervened to send the Yen lower against the Dollar. This led to gains in stock markets on both sides of the Pacific. On the commodities market, the price for Brent crude was flat, closing at $78.2 per barrel.

The US Secretary of the Treasury, Tim Geithner, speaking to a committee of Senators stated his belief that the Yuan was significantly undervalued. A weak Yuan acts as a subsidy on Chinese exports, making them artificially cheaper and so more attractive.

The European Union is drawing up legislation which it hopes will bring transparency and order to the markets with respect to short-selling and naked short-selling.

The fact that the Yen is at a 15 year high means that Japanese exports to the US (unless discounted) have not been more expensive for 15 years. In times of global economic stress, Japan can ill afford to be priced out of its major export market. Today, the Bank of Japan has moved into the markets to sell Yen and buy Dollars.

The old saying about the value of shutting stable doors after the horses have bolted does not seem to apply in the world of finance.

All of the world’s major stock markets closed higher, compared to how they stood last week. In Europe over the course of the week, the FTSE put on 1.4%, closing at 5501.6; the Dax rose by 1.3%, ending the week at 6214.8; the CAC put on 1.5% to end the session at 3725.8.

The OECD has concluded that the global recovery is slowing down, but they conclude that a second period of global recession is (currently) unlikely.

The current edition of the Beige Book has identified widespread signs of economic deceleration in the six week period to the end of August. The finding is in line with other economic indicators that suggest that the recovery in the world’s largest economy is losing momentum.

A sway of negative economic releases assaulted on risk appetite, pushing the bet currencies to the downside. Pressures about a potential peaking economies in the Euro-zone escalated sell-offs in the 17 nation currency.

A friend of mine who works in the financial sector in Japan once sent me a postcard that started “Greetings from the land of the rising Yen”, whilst that was twenty years ago, it might as well have been yesterday.

The profound risk rally came to an abrupt stop as European stress test insufficiencies put new worry into the market. The Euro slid to 1.2720, British Pound dropped to 1.53, and Aussie hovered at 0.90, the Yen pushed to a critical threshold of 83.50.

US Department of Labor figures for August have shown that the jobless total has risen for the third consecutive month. In the course of August 54000 jobs were lost. The figure means that the US jobless level has crept up by 0.1% to 9.6% from where it stood in July.