Original report in German.
USA Forex Fundamentals
The years 2007/2008 saw the biggest credit crisis ever and the impact for almost every citizen in Europe and America are still being felt today. As a result of the crisis, the borrowing of U.S. private consumers (or lending by banks to private consumers) fell dramatically, even if one excludes the mortgage data.
While borrowing in the 40 years prior to 2007 rose by 10% per year, the level of borrowing in 2007-2008 fell by 5%. The reduction in borrowing declined further by 2011, which led to the banking crisis.
Since 2011, borrowing is rising again sharply. Reasons for this is, among other things an economic recovery in the United States, and various government incentives.
Thus, the borrowing rose in March 2011 - March 2012 by 7.8% (excluding mortgage and inflation). In March alone, borrowing increased by 0.85%.
Interesting Facts:
These figures are positive and show that the rebound of the US economy is in full swing and at good pace. Moreover, the American consumer faith in its future looks more optimistic. Incidentally, the largest growth recorded is in credit for new cars.
Europe Forex Fundamentals
The election results in France and Greece were the focus of attention during the last week. Above all, the election results in Greece raise new reasons for concern.
Extremist parties on the left and right political spectrum in Greece won many votes, and these parties are in favor of withdrawal from the Euro zone.
Exclusion of Greece from the Euro zone is not generally considered a disaster, but a snowball effect could bring the euro area in serious trouble.
However, there are also positive to report from the Euro Area: The EU Commission has indeed confirmed a recession in February, but assumes that a second boom in Europe in the latter half of the year, could well be reinforced the following year.
This view is confirmed by the Ifo Institute (of the CESifo Group), which noted a significant increase in the economic climate in the first quarter.
"The economic outlook for the next six months in the euro area have improved significantly over the previous quarter and are in the majority of euro area countries in positive territory".
No improvement was recorded in the countries Greece, Portugal, Italy, Spain and Cyprus.
Forex Fundamental Preview for the week
On Monday, the same countries seek €5 bonds to bring to the market. Particular attention should be given the Italian bonds received with maturities in 2015, 2020, 2022 and 2025.
On Tuesday, the Australian Reserve Bank report will be published. After the Federal Reserve has recently reduced its key rate by 0.5%, suggestions for additional cuts are expected.
Some important data from the United States will be released and we also expect an EU economic meeting.
On Wednesday, France tries to bring some government bonds on the market and the the British central bank publishes its Inflation Report.
On Thursday, several European stock exchanges remain closed (Ascension).
On Friday, the beginning of a G8 summit at Camp David (USA) and the annual meeting of the European Bank for Reconstruction and Development in England.
Special thanks to our friends at Pipsologie for this piece. Please show your support by visiting their website Pipsologie.
Original report in German.
Greece has for the second time been saved by the EU. The EU has adopted a second aid package after the Greek government accepted further cost savings of 130 billion Euro’s. This means increased aid for Greece, Ireland and Portugal to the tune of 386 billion Euro’s.
On Thursday, the Greek government also adopted the bond-exchange mechanism (short-term bonds are traded in 30-year bonds at a fixed interest rate), and thus initiated a voluntary haircut from the private sector of more than 50%.
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On Wednesday, the ECB is said to provide a liquidity injection for local banks ( LTRO - Long-Term Refinancing Operation). The first package in December of almost 500 billion Euros, send the world’s financial markets and stock markets into euphoria (Look only at the performance of the stock indexes on and since 21 December).
Timeline
Monday- The second Greek aid package of 130 billion Euros goes to the House of Parliament. In addition, there will be an EU foreign ministers meeting.
Wednesday- a second ECB add package is expected (LTRO)
Thursday and Friday- EU summit in Brussels.
The U.S. unemployment rate and the non-farm payrolls, which are normally published on the first Friday of the month will be published on the second Friday in March.
EURUSD
The Euro has risen by as much as 2.34% (269 pips) last week. According to a new analysis I am now of the opinion that we are in a 4th Wave of a 5 wave pattern (based on Elliot Wave Theory). Of course, one might note here that this is a first wave after wave of an ABC correction, and that the market moves in a strong uptrend. I don’t however believe that this is the reason for the strong short positions on the COT Report. I therefore believe that the market, perhaps even after it rises to about 1.3500-1.3550, will see further new lows. The following weeks will show whether I'm right ....
Daily chart of the EURUSD on 26/02/2012
USDCAD
The USDCAD is at the end of a triangular formation. Therefore, it would have to breakout either direction. I assume that the outbreak will be bearish. Commercial and Non-Commercial positions (COT Report) have repositioned over the past two weeks. I see a first profit target at 0.9760 in the coming weeks.
Daily chart of USDCAD on 26/12/2012
USDJPY
The Japanese yen has finally made it, and the 50 MA to break through in the weekly chart. This MA was a strong resistance for many years. Also, the COT report supports this reversal signal. I tend to further rises in the pair without T / P at the moment.
Weekly chart of USDJPY on 26/02/2012
Special thanks to our friends at Pipsologie for their informative market analysis.
Please show your support by visiting their website Pipsologie.com. Original report in German!
The American Economy further surprised with good economic data. Thus, the applications for unemployment benefit have declined further to 348 thousand, and have reached a record low since 2008. As late as September 2011 they were at a level of 400 thousand applications and during the subprime crisis in April 2009 at 669 thousand. The core producer price index is also increased in January by as much as 0.4% (expected, 0.1%), and even new construction increases slowly.
On the other hand there are still concerns about Greece. The Europeans want to see further savings and cuts from Greece. These austerity measures depress the economy further. In 2011, the falling GDP by 6.8% in Greece, where the central bank expected a decline of 4% and the Greek government itself has prognostic adorns a decline of 5.5% ( the press February 14, 2012 ).
Another depressing figure is the suicide rate, which has increased a massive 40% by 2011. The famous investor George Soros criticized the European Monetary Union, which is his view on a self-destructive course. Above all, the harsh demands of Germany lead by Soros to " a debt deflationary spiral with consequences " in Greece. It is now more open also discussed Greece's national bankruptcy, which allows for all parties better future prospects.
On Monday, Euro group meets in Brussels in order to adopt a second rescue package possibly for Greece. On Tuesday, EU Economic and Finance Ministers meet to further discuss the same topic.
On Monday, the American Stock Exchange is also closed for a holiday.
EURUSD
My analysis of the previous week has been very good. However, I feel it is more clear that it breaks over the 38.2 Fibo.
Daily chart of the EURUSD on 20/02/2012
USDCAD
The USDCAD has broken a long downward trend. This breakthrough is also supported by the last two weeks of the COT Report results. That is why I am counting on continued falling prices in this currency pair. My price target at 0.9770 there about for the next few weeks.
Daily chart of USDCAD on 20/02/2012
Good luck trading folks!
