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IMF cuts global growth outlook, market participants still confident

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China, the second-largest economy by both nominal total GDP and purchasing power parity, proved in the last quarter of 2014 to have temporarily stabilized its situation. Yesterday the Chinese economy reported a better than expected, but in line with last publication GDP at 7.3%. Fixed Asset Investment in line with expectations at 15.7%, Industrial Production increased to 7.9% and the Retail Sales advanced to 11.9%. All the capital markets, currencies of emerging countries and trade partners enjoyed this news. We could also notice a reaction on copper, which advances after the economic data was released.

New Zeeland is getting news these days as the NZIER Business Confidence increased to 23 points while the GDT Price Index (change in the average price of dairy products sold at auction) fell to 1% and the Consumer Price Index also decreased to -0.2%. The NZDUSD currency pair is currently trading in the 0.7650 zone trying to overcome the range developed since September 2014 and to continue the descending trend. Both the New Zeeland and Australian dollar are currently following descending paths which for now don’t have reasons to be stopped.

Gold is currently running in an upward trend and just broke the 1300 dollar per ounce resistance level. The precious metal is appreciated because the markets are feeling the tensions around the ECB meeting on Thursday, elections in Greece on Sunday and the most recent cut in the IMF forecast for global economies to 3.5% from 3.8% while in China its projected growth to 6.8% down from 7.1%.

Yesterday in the Eurozone the German ZEW Economic Sentiment was published up to 48.4 points while the ZEW Economic Sentiment in the Eurozone increased to 45.2 points. It looks like market participants are confident in the local business environment because of the euro depreciation which actually helps the economy, the 50% decrease in the price of oil which helps the consumer’s budget and the Mario Draghi’s rescue program which is expected to come into effect as soon as the end of T1 2015. The DAX index is currently below the 10314 resistance level, but it won’t be a surprise to have it marking new high levels.

The EURUSD currency pair had one last episode of correction yesterday as it retested the 1.1600 resistance level and is currently marking new local lows. If the market participants’ expectations are met and the 500 billion Euro QE program is announced by president Mario Draghi on Thursday, the European single currency may seriously lose ground.

This morning the market received news from Japan, where the central bank maintains unprecedented monetary easing and cut its inflation forecast to 1% for the fiscal year starting in April. It seems that the decreasing price of oil is seriously posing problems to the efforts to reflate the world’s third-biggest economy. USDJPY fell to 117.70 managing to start a new impulse in the new descending path.

 

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