Forex Fundamental analysis
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  1. #1

    Forex Fundamental analysis

    Pitfalls in the ECB plans. Fundamental analysis for 26.08.2014

    Mario Draghi’s Friday’s speech in Kansas City marked a significant shift in emphasis in the policy of the ECB. However, over the years of the monetary union the Europeans have taken on so many restrictive measures that the practical realization of all that Draghi said would be extremely difficult. In fact, he shifted the responsibility for low inflation in the national government, calling the last to think about the growth of government spending.

    The fact is that as soon as there was a question about the need to tighten the belt, the European capitals went about it in the simplest way - they mercilessly closed long-term investment projects, which could have served as a basis for future growth. The logic here is more than clear as for the ordinary voter a set of social benefits is far more important. And now Draghi strongly suggests that governments begin to invest in infrastructure.


  2. #2

    The States are returning to pre-crisis levels. Fundamental analysis for 27.08.2014

    The statistics even more clearly reflect the problems with the economic recovery, the beginning of which all European capitals were speaking about a few months ago. And today it became known that the German consumer confidence index has reduced from 9 to 8.6. It seems to be a slight drawdown, but this is the first negative monthly release level since December 2012. In addition, import prices fell by 0.4%.

    Disappointing reports came from other countries as well. In France, the producer confidence index fell, but the most dramatic data is out in Italy, the third largest economy in the euro zone. Earlier there were reports that the country has once again landed in a recession, and now data came out on a sharp drop in the consumer confidence index - with last month’s drop from 104.0 to 101.9 in August. Consequently, a rapid recovery from recession may not happen.


  3. #3

    Thorny Path to European QE. Fundamental analysis for 02.09.2014

    The impending meeting of the ECB raises increasingly heated debates on the effectiveness of the possible onset of the European version of quantitative easing. Opponents of the incentive program argue that the ECB was “stalling” for too long and the exhaust from the mass purchase of assets will not be as significant as it was in the States, where the unemployment rate seems to be stabilized, and the economy has returned to growth.

    Supporters of the start of QE insist that the risks of deflation and the meagre GDP dynamics just do not leave the European regulator any other way to influence the situation. Inflation is with each month getting closer to approaching the zero line, which certainly increases the pressure on the ECB. However, the main consequence of QE is to increase aggregate demand, namely stagnant demand remains one of the key problems in the euro zone.


  4. #4

    Fateful decision of the ECB. Fundamental analysis for 04.09.2014

    One can argue which is more important for the further fate of the Eurodollar this week - the results of the ECB meeting or Friday's report on American employment, but both of these events could have a strong impact on the market. Regarding the States, if unemployment will continue to fall and new jobs will show strong momentum again - it will be another argument in favour of an earlier rate hike by the Fed.

    Speaking of the results of the ECB meeting, it is unlikely that we will see another rate cut - it simply is not able to resist the extremely low inflation, which has slipped to around 0.3% by the end of August. The deposit rate is also likely to be at the level of -0.1%, and all eyes will be on Mario Draghi’s press conference, during which he will reveal hi position in relation to the current statistics.


  5. #5

    The ECB is keeping QE for winter. Fundamental analysis for 05.09.2014

    The outcome of yesterday's meeting of the ECB has been one of the most surprising in the history of the monetary union. Lowering the key rate to 0.05% was not expected by anybody. It is likely that the slowdown in inflation to 0.3% in August after all was the critical level for the ECB, the achievement of which was the starting point for more action from the regulator to stabilize the continuously declining inflation.

    Much more interesting was the announcement of the beginning of ABS buying. But do not confuse this program with full-fledged quantitative easing. As part of the ABS, the launch of which will take place in October, the regulator will only buy the assets of the private sector. Accordingly, the size of the program will be limited to a few hundred billion euro, which is clearly not a full QE, given the scale of the euro zone.


  6. #6

    There are talks about reforms in the euro zone. Fundamental analysis for 08.09.2014

    Friday's data on the labour market came out quite weak. Only 142k new jobs were created in August, which is well below the monthly average index over the past six months at 226k. The situation was smoothed over with the fall in unemployment to 6.1%, the best data for the last six years. Consequently, the intrigue surrounding a possible rate hike will only increase.

    Support will come from a more detailed report on the labour market - namely, the wage growth of 2.5%, decrease in the number of "long-term unemployed", as well as Americans who do not work full time. There is another nuance, in most cases the August data is usually subsequently revised in a positive way. On average, the adjustment is 31k, which can lead figure into the area of 180k.


  7. #7

    The Euro is skyrocketing. Overview for 24.04.2017

    The main currency pair is trading to the upside being influenced by the first voting results of the presidential elections in France.

    France has every right to celebrate as the risks of exiting the European Union are slowly decreasing, but these emotions are sure to fade away in a couple of days and the EUR/USD pair may start a correction. So far, the situation for the instrument is very positive, the current quote is 1.0869.

    Last Sunday, the first of the two votings of the presidential election took place in France. The first voting was won by Emmanuel Macron, a neutral candidate, but infamous Marine Le Pen was a runner up and will also take part in the second voting. Everything happened the way it was expected, but investors were pretty happy about it. Even in theory, a possible exit of France from the European Union, which was the foundation of euroskeptics’ election campaign, terrified the country’s population. Even those, who are rather far away from the financial world, understood that Paris couldn’t afford such a move.


  8. #8

    The Yen is trying to strengthen again. Overview for 28.06.2019

    On Friday, USDJPY is slightly falling; investors are interested in “safe haven” assets.

    The Japanese Yen is getting stronger against the USD on Friday. The current quote for the instrument is 107.65.

    Right now, investors are mostly focused on the G-20 Summit that is taking place in Osaka, Japan. So far, all meeting are general in nature, that’s why In anticipation of the news, market players prefer “safe haven” assets.

    In the morning, Japan published several reports that might be interesting to the capital market. The Unemployment Rate remained at 2.4%, which is not bad. The Tokyo Core CPI was 0.9% y/y in June after being 1.1% y/y the month before, which means that the CPI may also be not very impressive in the nearest future.


  9. #9

    The Euro is surrendering early in July. Overview for 01.07.2019

    The major currency pair is falling on Monday morning; the USD is recovering.

    On Monday, EURUSD is trading downwards. The current quote for the instrument is 1.1333.

    The key trigger for the USD recovery was results of the G-20 Summit that took place in Osaka last week. The American and Chinese leaders agreed to resume negotiations after the White House made some concessions. It means that both parties finally have a real chance to achieve progress in negotiations, which have been in deadlock for a long time.

    In the afternoon, the Euro Area and its members, such as Spain, France, and Germany, will report on the Manufacturing PMI for June. However, these reports often have slight impact on currency pairs.

    Also, the Euro Area is scheduled to report on the Unemployment Rate for June, which is expected to remain unchanged at 7.6%. It’s a great number considering complications with migrants in some of the countries.


  10. #10

    The Australian Dollar is rising after the RBA’s decisions. Overview for 02.07.2019

    AUDUSD is recovering; the Reserve Bank of Australia cut the rate.

    The Australian Dollar gained support against the USD after the RBA’s decisions during its July meeting. The current quote for the instrument is 0.6981.

    The July meeting of the Reserve Bank of Australia took place today and the regulator decided to cut the rate from 1.25% to 1.00%. However, this decision was pretty much expected, because the RBA signaled about it earlier.

    This decision has to support the Australian economy, which experienced some decline one way or another due to trade wars between the USA and China. China is Australia’s key trade and economic partner, and Chinese problems will become Australia’s one sooner or later.


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