forex markets outlook q2 2012. pdf

The forex STF outlook is dominated by international headlines. For example the ECB and BOE have adamantly announced that they would not be tinkering with interest rates in the short run. This led to critical analysis of the motives behind the decisions. BOE never issues policy statements that this was seen as an unusual step. Consequently the conclusion was that there were hidden problems.

Declining economies are waiting for a stimulus in order to boost their incomes. The most important thing for the Western economies is to recapture the manufacturing reputation which is gradually moving to the East. Germany is the only exception in as much as its industrial output continues to grow despite the woes that are faced by other economies.

A forex strategy that is based on current affairs

The ECB is trying to handle a debt crisis that has been in the making for a significant period of time. Early this year they raised interest rates and it would be difficult for the executives to justify a second round of tinkering. Betting is earnest on the market and there is speculation that a quantitative easing program may be proposed.

According to the forex STF analysis, the currency manipulation will take into account the possibilities of purchasing bonds from the peripheral nations. This should hopefully reduce the possibility of the yields rising too quickly. When the trade balance figures from Germany and France were released there was some price since they were lower than expected.

The EURUSD pair will test support at 1.40. In such a market the scalpers are likely to have the upper hand because they are not committed on a long term basis. The AUD traded very low after the announcement that the unemployment rate had jumped from 5.1% to 5.3%. The forecasts had said that the economy would add 10,000 but actually lost 9,700.

The harsh economic conditions and forex trade

Some economies are responding with some results. For example Australia did a rate reduction which led to a rebound. Switzerland does not seem to have problems with unemployment as their figures stand at 2.8%. The Swiss Franc will therefore continue to be a desirable currency unit. According to SNB, the rate will be a healthy 1.20 against the Euro.

Many investors are waiting to see how the Bank of Canada responds. At the moment they are stable. Bankers are already worrying about a slowdown. In such circumstances inflationary pressures take a second seat in the list of priorities. The forex STF review is concentrated on macroeconomic dynamics and their meaning for ordinary participants within the industry

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