Forex Fundamental Analysis

There is a lot of talk at the present time as to whether the economy of the United States is going to enter a recession any time soon, and we have previously covered this question quite recently.

Mr Amari decided to resign in the teeth of a storm alleging that he was implicated in bribery scandal involving a construction company.

Soros is now targeting China by asserting that he shorted a large volume of Asian currencies—mainly the Chinese renminbi and the Hong Kong dollar.

The decline in the price of crude oil and continuing sanctions have had an effect on the Russian economy which contracted by 3.7% in 2015, according to the state statistical service.

It looks like the glitter of gold is shining once again. The $15 trillion selloff in global equity markets since May and the rout in oil prices are reviving the lure of gold for investors looking for safe havens for their money.

It is hoped that further easing of the money supply by an extension of the scope of the current €60 billion a month asset purchase scheme will inject some inflation into the Eurozone economy. It is currently languishing at 0.2%, just one tenth of its target value.

Last week heralded the start of a recovery for the world’s major markets with rising oil prices and Chinese GDP data suggesting that things aren’t as black as they are painted.

One of the major issues discussed at the recent World Economic Forum in Davos was global dependence on oil in general and the drastic drop in oil prices in particular.

The Great Depression, which started in the USA, lasted from 1929 until the outbreak of the Second World War in 1939. The Global Financial Crisis has been the world’s deepest recessionary cycle since then – hopefully, it will not take a third World War to restore normal growth to global markets, but the duration is already similar.

Employment is a lagging indicator of the economic cycle in that jobs only start to be lost once things have turned black and are only recreated when demand and the order books indicate that more help is needed. Consequently, the fact that UK unemployment has decreased to a level prior to the Global Financial Crisis can only be good news.

The rout in crude oil prices shows little sign of stopping. The price for a barrel of Brent crude is flirting with the sub $28 level, having dipped under the price in yesterday’s trading. Brent started the year at $37.3 - a 25% decline in just three weeks.

Inflation in the People’s Republic of China is not so regimented, having peaked at 28.4% (1989) and fallen to -2.2% (1999), but it averaged 1.6% over the year ending in December 2015.

The theme of the upcoming World Economic Forum is "Mastering the Fourth Industrial Revolution" but despite the focus on transformative technology, much time will be spent churning over the "old" issues still plaguing the world such as the recent market volatility in China, oil prices, monetary policy divergence, terror risks and geopolitical tensions.

When it comes to the Islamic Republic, everything is dramatic and serious. Last Saturday was no ordinary day in Iran as many of the international sanctions that have strangled the country’s economy over the last decade were lifted after UN inspectors concluded that Tehran had dismantled significant elements of its nuclear program.

Last week was another uniformly bleak affair for the world’s major markets with continuing turmoil in Chinese markets and slumping oil prices.