Article Summary:

Here is a collection of Forex News Updates, Other Forex Trading System Resources and Information.This week starts earnings season for US companies and, rightly or wrongly, will help show whether or not economic progress is occurring.  We’ve witnessed the disconnect between corporate profits and the “real economy”—namely jobs—and good corporate earnings will give the


Article Content:
This week starts earnings season for US companies and, rightly or wrongly, will help show whether or not economic progress is occurring.  We’ve witnessed the disconnect between corporate profits and the “real economy”—namely jobs—and good corporate earnings will give the unemployed hope that hiring may be soon to follow.



In the UK, GDP figures came in as expected showing slightly positive growth for the quarter, and there was an article over the weekend claiming that the UK’s proposed bank requirements would lead to a double-dip recession.

In the Euro zone, potential fears of bank solvency issues were balanced out by German economic strength measured by employment and industrial production figures.  A lower Euro had helped German exports and if the banks can “pass” the stress tests without setting off a chain reaction, then the Euro could stabilize near these levels.

In Japan, the ruling party lost control of the upper house in elections, providing political uncertainty and causing the Yen to sell-off overnight.  However, overall risk aversion has brought strength back to the Yen.

In the forex market:

Aussie (AUD):  The Aussie is lower on risk aversion, despite the fact that home loans rose for the first time in 8 months.  However, futures are showing that traders are decreasing their bets for an Aussie rise vs. the Dollar.  US corporate earnings will be the major driving force this week, with better numbers encouraging risk appetite.

Kiwi (NZD):  The Kiwi is also lower on risk fears despite the fact that the NZ budget deficit came in narrower than expected.  Home prices came in slightly lower, but still posting gains of 5.2%.  Inflation figures are due out later this week.

Loonie (CAD):  Not a lot of news for the Loonie this week but expect it to be extra sensitive to US corporate earnings this week.  The US is largest importer of Canadian goods and services.

Euro (EUR):  The Euro is also lower as the policy makers are already calling for better capitalization of the banks before the results of the stress tests are released.  It is no secret that banks would be better off with more capital; the problem is whether or not increased capital requirements will hamper growth.  Germany is showing that its economy is still strong, and that may be enough to out-weigh the negativity surrounding the Euro.

Pound (GBP):  The pound is lower as DGP figures showed .3% growth in the first quarter; however the current account deficit is at its widest margin since 2007.  Economists are expecting better growth in the 2nd quarter, before the impact of fiscal tightening takes place.  The Pound traded below 1.50 earlier but has since rebounded higher.

Dollar (USD):   The Dollar is seeing some strength this morning as risk aversion is present at the start of the US session.  US CPI and PPI figures are due out later this week, but all eyes will be on the US corporate earnings reports.  Good earnings will provide hope that hiring may be around the corner, but at the end of the day we may still be in the “tale of 2 economies”, with companies thriving while the unemployed are crying.  Bad corporate earnings could send the markets reeling, so expect volatility in the short-term.

Yen (JPY):  Overnight, the ruling party lost control of the upper house of government, providing political uncertainty and the fear that Japan may have trouble attempting to tackle its deficit.  The Yen was lower, but is now seeing strength on risk aversion.  The Bank of Japan Monetary policy meeting is taking place this week but don’t expect them to move on rates.  Japan will trade this week on risk themes.

So the market and the US government are counting on good corporate earnings to provide confidence that the economic picture may be improving.  With higher profits, the likely conclusion is that companies will begin hiring again which will hopefully help lower unemployment.

However, this may not necessarily be the case.  Companies are fearful of the current economic climate as potential new rules, regulations, and taxes spur hesitation.  Companies will be very cautious when looking to expand and could be quite content with their present situation.

Whether or not this is the case remains to be seen as the market expects good earnings.  Should the numbers be average or even bad, then that could open up a whole new can of worms.

So expect volatility this week, and be ready to profit from short-term fluctuations should the situation present itself.

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