Fundamental Analysis

International events can have a great effect over currencies and our trading perspectives. Analyze the most important news that can help you with your trading.
The financial crisis has made a big hole in all the world's major economies, with official data showing the 15-nation euro zone economy had shrunk by 0.2 percent for the second quarter in a row, meaning it technically is in recession. The United States is probably already in recession, most economists agree, but official data showing that will not come out until January. Even though we are in bad times I realize we need to make the most of this situation.
Studying the behavior of the currencies during this phase of financial crisis and worldwide recession, we could analyze the market under extreme situations. That way I sure we could learn something. This group is to create a report of the most important facts during this crisis.
The idea in this Threat is to get together the most important facts occurred during this recession stage in order to compare it later with the market behavior and visualize how affected it. So please post the most important issue you think has worsened the market performance.

AngyTrix’s Blog

Euro forecasts against the US Dollar took a turn for the worse on the week, as generally dismal European economic data and further losses in the US Dow Jones Industrials Average led to similar Euro/US Dollar weakness. Official confirmation that the German economy entered a technical recession through the third quarter suggested that the broader Euro Zone finds itself in a similarly weak position—forcing further deterioration in euro fundamental forecasts.

Australia Sees Recession in 2009.
Australia faces the risk of recession at the beginning of next year as the Westpac leading index plunged to the lowest in 23 years. The Euro and British Pound remained range-bound in overnight trading. The release of the minutes from the last meeting of the Bank of England headlines the economic calendar in European trading hours.
Japan's Economy Into Recession.
Japan's economy, the second largest in the world, fell into recession for the first time since 2001 as GDP fell an annualized 0.4 percent in Q3. This was the second consecutive contraction, and with a global economic slowdown impairing demand for foreign goods, this export-dependent nation will likely feel the pain. Nevertheless, the Japanese yen still has bullish potential as volatility remains high, leaving risk aversion in play.

Euro zone demand is plunging and price pressures vanishing, business surveys showed on Friday, while central bankers weighed the bleak prospect of deflation. The Bank of Japan left its key interest rate at just 0.3 percent and said there would be a long road to recovery. Japan's decade-long battle with steadily falling prices and economic stagnation looms large in officials' memories. The United States, Britain and Europe are expected to ease their rates further next month as the worst financial crisis in 80 years hastens recession across much of the globe.
Central banks, faced with a sudden collapse in growth as well as inflation, have slashed rates and are expected to keep doing so, although economists warn they may run out of rope before prices hit rock-bottom. Reversing recession is doubly difficult if prices fall broadly and constantly because there is no incentive to spend as consumers and firms know things can only get cheaper. With banks already reluctant to lend -- after a U.S. housing market collapse caused many to sustain huge losses and some to fail -- deflation would represent a perfect economic storm.

Trading Activity Was More Passive Than Usual At Monday Opening
After the U.S. government agreed to pump $20 billion of new capital into Citigroup, averting a bank collapse that could have crippled the world's financial system, U.S. stocks headed for a higher open on Monday. The Citigroup rescue, along with Friday's news that President-elect Barack Obama, would assign current New York Federal Reserve Bank President Timothy Geithner as U.S. Treasury Secretary, underpinned positive sentiment. However, investors remain extremely cautious that the plan to save Citigroup will do much to prevent the world's largest economy suffering a deep recession.

Currency trading markets have never been more correlated to the US Dow Jones, Crude Oil, and other key assets. The financial crisis has essentially created cross-market correlations that never previously existed. All the while, we have seen more traditional correlations pick up substantially; the link between the Japanese Yen and the US Dow Jones Industrials Average has never been stronger.
Every downward move in global equity indices encourages traders to close short positions in the low-yielding Yen fully consistent with the broader theme of financial deleveraging. Continued losses in the Dow and other major markets would likely lead to further JPY rallies. We may continue to see the Euro/US Dollar move inversely to rate expectations. If higher central bank interest rate expectations translate into financial market deterioration, the US dollar could continue to gain. Any further deterioration in global financial conditions would signal a continuation of said trends, and it seems that British Pound forecasts will largely depend on the future of financial risk appetite. If we see further recovery in UK equity markets, the British pound could quite easily rally further off of its recent multi-year lows against the US Dollar.

Investors, fearful that the job losses will cause consumers to cut back spending and make the profit outlook more dire, sold stocks more broadly, but the energy sector was the biggest casualty. In fact, despite the increasingly effort from central banks and government to tackle our global situation the picture of the world's economical future look a little bit cloudy.

The US Dollar took some punishment as bonds sold off and stocks began to rally.
However, one day of losses does not change the bullish dollar trend. Regular economics do not apply in times like these. In normal market conditions, expected returns hang in a delicate balance with a general tolerance for risk. In fact, the setting for the markets is clearly far from normal – just look at the advance in the US dollar last week immediately following the report of a 533,000-person drop in national payrolls.
How long can a market go against basics law of market theory? That depends on speculators. As long risk sentiment holds as the dominant trend across all asset classes and all markets, caution will keep capital flowing towards safe havens.

The Potential Bailout Of The U.S. Automakers Continues To Move Forward Which Could Spark Risk Appetite. AngyTrix’s Blog

I guess, the whole 2009 will be in recession for many countries... hope all of us will manage to get out of it sooner or later. It is depressing to see others losing jobs.

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to prevent this ,be a moneymaker than a job seeker

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