Forex Investing Blog

Article Summary:

Article Content:
The market starts out his morning in “relief mode” as there was no negative news related to the European debt crisis released over the weekend.  The G-20 met over the weekend to discuss global economic challenges going forward and appear to be divided over what is the best course of action to resume growth.



The general consensus is that every region around the world is going to try to export their way to growth; however, some regions will have distinct advantages over others due to currency valuations.  With different countries trying to devalue to encourage exports, the race to the bottom will leave some out in the cold.  However, US Treasury Secretary Geithner said that the world shouldn’t count on the US consumer to drive growth and that individual countries need to stimulate their own demand.

This is basically the Chinese model, as their peg of their currency to the US dollar provided them with artificially low valuations which allowed them to experience exponential economic growth through exports.  If China is unwilling to allow their currency to float freely in the market, then the world economic balance will be out whack with some countries unable to recover.

The same could be said of Germany, who was able to experience competitive markets due to the having the same currency valuation as other nations of the EU.  Allowing the weaker EU nations to borrow excessively benefitted German exports to the region.

Now, Germany stands poised to experience even further growth of exports, as the Euro is weaker making German products cheaper to the rest of the world.  As I’ve mentioned before, a weaker Euro is good for Germany.  As a result of the recent sell-off in the Euro, Germany reported a growth in factory orders of 2.8% vs. an expectation of a decline of .4%.

However, the question remains: Who’s buying?  If world consumer demand decreases due to a lack of credit availability and austerity measures, who is going to lead world recovery?

In the forex market:

Aussie (AUD):  The Aussie is trading higher this morning after opening lower from Friday’s close due to some risk fears abating.  So the Aussie is still lower.  European debt fears and G-20 differences of opinion are contributing to risk sentiment.

Loonie (CAD):  The Loonie is higher this morning on oil price recovery to 71.5, but is weighed by overall risk in the market, particularly Euro-related.

Kiwi (NZD):  The Kiwi is trading similarly to the Aussie.

Euro (EUR):  The Euro is trading higher off of lows of just below 1.19 in the overnight session.  A lower Euro lower is just what the Euro zone economy needs, as evidenced by the increased factory orders number in Germany.  However, the ongoing debt-crisis is the elephant in the room and further problems will only drive the Euro lower, faster.

Pound (GBP):   The Pound is higher despite new UK Prime Minister Cameron’s comments that the UK deficit situation is worse than feared.  This will mean severe budget cuts and the potential for higher taxes, however the thing that must be remembered about the UK: at least they’re not in the EU!

Dollar (USD):   The Dollar is lower as risk fears are lessening to start the week.  In the familiar pattern I’ve mentioned time and time again, the Dollar starts the session higher then gradually loses value throughout the US trading session as the potential for market-moving news out of the EU lessens as their trading day comes to a close.  US retail sales figures are due out on Friday on a week that is pretty devoid of economic news.

Yen (JPY):  It’s official, former finance minister Kan is the new Japanese Prime Minister, and his weak yen policies are intended to stimulate economic growth and help the Japanese stocks.  Nevertheless, the Yen traded at an 8-year higher vs. the Euro as risk aversion spurred demand.  Japanese trade balance figures are due out tomorrow followed by GDP figures on Wednesday.

Every day the markets can make it through without a landmine going off in Europe is positive.  Global recovery is still a long way away and you can now see how global cooperation is going to be needed going forward.

The markets of the past have created great imbalances, and those who benefitted in the past are reluctant to change for the future.

I expect the markets to continue to chug along, with the Euro continuing to decline in value over the course of time.  This decline can and will be accelerated by any problems related to the debt crisis.  Whether or not this crisis will be managed effectively remains to be seen.

So there is still considerable risk in the market, and don’t lose sight of that even if we see some decent economic reports from around the globe.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here!  Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, cad, China, comments, course, crisis, currenc, currency, currency market, currency trading, dollar, economic, economy, EUR, Euro, Europe, fear, forex, forex market, free, fx, fxedu, gbp, Geithner, Il, Japan, jpy, Kiwi, live, loonie, lower, Mike Conlon, news, nzd, oil, pound, practice, practice account, rate, release, retail sales, RSI, sentiment, ssi, stock, stocks, time, trade, Treasury, USD, Yen

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Article Summary:

Article Content:
The market starts out his morning in “relief mode” as there was no negative news related to the European debt crisis released over the weekend.  The G-20 met over the weekend to discuss global economic challenges going forward and appear to be divided over what is the best course of action to resume growth.



The general consensus is that every region around the world is going to try to export their way to growth; however, some regions will have distinct advantages over others due to currency valuations.  With different countries trying to devalue to encourage exports, the race to the bottom will leave some out in the cold.  However, US Treasury Secretary Geithner said that the world shouldn’t count on the US consumer to drive growth and that individual countries need to stimulate their own demand.

This is basically the Chinese model, as their peg of their currency to the US dollar provided them with artificially low valuations which allowed them to experience exponential economic growth through exports.  If China is unwilling to allow their currency to float freely in the market, then the world economic balance will be out whack with some countries unable to recover.

The same could be said of Germany, who was able to experience competitive markets due to the having the same currency valuation as other nations of the EU.  Allowing the weaker EU nations to borrow excessively benefitted German exports to the region.

Now, Germany stands poised to experience even further growth of exports, as the Euro is weaker making German products cheaper to the rest of the world.  As I’ve mentioned before, a weaker Euro is good for Germany.  As a result of the recent sell-off in the Euro, Germany reported a growth in factory orders of 2.8% vs. an expectation of a decline of .4%.

However, the question remains: Who’s buying?  If world consumer demand decreases due to a lack of credit availability and austerity measures, who is going to lead world recovery?

In the forex market:

Aussie (AUD):  The Aussie is trading higher this morning after opening lower from Friday’s close due to some risk fears abating.  So the Aussie is still lower.  European debt fears and G-20 differences of opinion are contributing to risk sentiment.

Loonie (CAD):  The Loonie is higher this morning on oil price recovery to 71.5, but is weighed by overall risk in the market, particularly Euro-related.

Kiwi (NZD):  The Kiwi is trading similarly to the Aussie.

Euro (EUR):  The Euro is trading higher off of lows of just below 1.19 in the overnight session.  A lower Euro lower is just what the Euro zone economy needs, as evidenced by the increased factory orders number in Germany.  However, the ongoing debt-crisis is the elephant in the room and further problems will only drive the Euro lower, faster.

Pound (GBP):   The Pound is higher despite new UK Prime Minister Cameron’s comments that the UK deficit situation is worse than feared.  This will mean severe budget cuts and the potential for higher taxes, however the thing that must be remembered about the UK: at least they’re not in the EU!

Dollar (USD):   The Dollar is lower as risk fears are lessening to start the week.  In the familiar pattern I’ve mentioned time and time again, the Dollar starts the session higher then gradually loses value throughout the US trading session as the potential for market-moving news out of the EU lessens as their trading day comes to a close.  US retail sales figures are due out on Friday on a week that is pretty devoid of economic news.

Yen (JPY):  It’s official, former finance minister Kan is the new Japanese Prime Minister, and his weak yen policies are intended to stimulate economic growth and help the Japanese stocks.  Nevertheless, the Yen traded at an 8-year higher vs. the Euro as risk aversion spurred demand.  Japanese trade balance figures are due out tomorrow followed by GDP figures on Wednesday.

Every day the markets can make it through without a landmine going off in Europe is positive.  Global recovery is still a long way away and you can now see how global cooperation is going to be needed going forward.

The markets of the past have created great imbalances, and those who benefitted in the past are reluctant to change for the future.

I expect the markets to continue to chug along, with the Euro continuing to decline in value over the course of time.  This decline can and will be accelerated by any problems related to the debt crisis.  Whether or not this crisis will be managed effectively remains to be seen.

So there is still considerable risk in the market, and don’t lose sight of that even if we see some decent economic reports from around the globe.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here!  Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, cad, China, comments, course, crisis, currenc, currency, currency market, currency trading, dollar, economic, economy, EUR, Euro, Europe, fear, forex, forex market, free, fx, fxedu, gbp, Geithner, Il, Japan, jpy, Kiwi, live, loonie, lower, Mike Conlon, news, nzd, oil, pound, practice, practice account, rate, release, retail sales, RSI, sentiment, ssi, stock, stocks, time, trade, Treasury, USD, Yen

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