Forex Fundamental Analysis
Economics is a cyclical beast. Any Bull Run
will eventually peter out and turn into a Bear market. Periods of seemingly
unlimited growth, where the only way is up, always end with a dose of reality
as profits are taken and the market falls.
The financial crisis has seen the value of Dexia shares reduced by two thirds since November of last year.France and Belgium announced that they would step-in to prevent the bank’s collapse.
Last week, with the exception of the
Nikkei, the world’s major markets managed to regain some ground. In Europe over
the course of the week, the FTSE made 3.4% and closed at 5303.4; the Dax made 3.2%
to close at 5675.7; the CAC climbed by 3.8% to end the session at 3095.6.
The Bank of England has maintained its policy of offering a record low of just 0.5% interest since March 2009.
Cast your minds back just four years; sub-prime mortgages were
securitised into investment grade securities; markets were bullish; the
financial sector could do no wrong
Moody’s have not helped the European sovereign debt crisis, nor the fate of the Euro, by deciding to downgrade Italian debt from A2 to Aa2. The reason that Moody’s cite for the current downgrade (and leaving a negative outlook flag against the Italian economy) is that there had been a “material increase in long-term funding risks for the euro area", due to lost confidence in Eurozone government debts”.
There is no doubt that the motivation of the EU and IMF when granting Greece its first bailout package was to help it avoid the risk of default on its existing financial obligations. Terms and conditions were set for the granting of the €110 billion bailout package and the loan attracted a significant level of interest (between 3 and 5%).
Last week marked the end of Q3 2011. It was one of the worst quarters that the markets had experienced in a decade. But what can we learn from these failures?
The President of the European Commission, Jose Manuel Barroso, has floated the idea that all financial transactions which involve an EU partner should incur a tax of 0.1%
The German parliament is set to vote on whether to endorse a Eurozone proposal to beef-up the European Financial Stability Facility (EFSF).
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