Forex Fundamental Analysis

In most developed economies, an unemployment rate of 5.7% would be a source of pride. In Japan, the figure represents a record high and points to the depth of the recession affecting the country. The unemployment figures are the worst on record since World War II.

In early trading yesterday, the world’s major stock indices put on a little value, but by the close, all except for the Nikkei 225 were in negative territory. The Japanese index managed to hold onto its gains, closing up by 0.36% at 10530.

You don't have to be a master at forex analysis to realize that the strongest of the major currencies this year has been the Australian Dollar. The bullish ways of the Aussie Dollar aren't all that surprising, at least from a fundamental standpoint.

History was made in Japan at the weekend with the election of the Democratic Party of Japan (DPJ). The electoral success brought to an end a period of fifty-four years of rule by the Liberal Party of Japan (LPJ).

The US dollar concluded last week on a lower note, with the released data pretty much in line with expectations, while Wall St closed its fifth straight close only slightly different than its open.

U.S. Dollar Trading (USD) had yet another day of varied trading with a positive trend in Asia balanced by a negative one in Europe then followed by strength in New York. Chinese stocks plummeted over 5% at one point in Asia before paring losses going into Europe.

Both the USD and the EUR increased in value vs. the yen in Monday’s Asian market as Asian shares peaked the risk appetite of investors' and caused increased purchasing of risk-sensitive units.

The Dollar has continued its march to the downside in recent trading, with only Monday’s sharp move higher against the backdrop of a global equities selloff the exception to the trend.

The Euro has benefited in recent weeks from signs of a gradual recovery in major Eurozone economies, most notably Germany, where Tuesday’s ZEW economic sentiment survey was dramatically better than analysts had expected.

Trading in the British Pound is sure to be volatile on Wednesday, when minutes of the most recent Bank of England MPC are released.

Following a long 17 month period of economic contraction, Japan's economy actually grew for the first time as GDP data came out at 0.9%, which is a little worse than most analysts predicted, but objectively, not a bad number.

Currency traders will focus on this afternoon’s policy statement from the Federal Reserve. While no change is expected in the Fed’s lending rate, traders will carefully parse the wording of the statement due for release at 14:15 EDT (18:15 GMT).

The Euro weakened on Monday against both the Dollar and Yen as ratings agencies downgraded two Eastern European nations, Estonia and Latvia. Speculation has thus risen that a wave of credit reductions may sweep across the “third tier” economies which have joined the EU in recent years.

The Euro weakened on Monday against both the Dollar and Yen as ratings agencies downgraded two Eastern European nations, Estonia and Latvia. Speculation has thus risen that a wave of credit reductions may sweep across the “third tier” economies which have joined the EU in recent years.

We believe that the U.S. Dollar has reached an inflection point. For the past several months, the Dollar has declined on “good news” indicating that the two-year global crisis was drawing to a close and that economic data was showing gradual improvement.