Vantage F provides a daily overview of the news activity and announcements currently shaping currency movements across the world. Jay Mawji, the company's head of market analysis, takes a look at news surrounding Eurozone economies on 29th April 2012.
In some senses reality hit home in April, with markets across the western economies shaken by bad data and a realisation that economic policy formulated over previous months may have failed.
The Eurozone agreed a bailout of Greece which formulated economic policy to maintain budgetary control by Eurozone nations. Each nation made austerity the top of their economic goals, promising to bring deficit well below current levels to prevent another 'Greek Scenario'. The downside to this was that the Eurozone economies began to decline and falling growth figures pushed up unemployment. As resentment grew on the streets, confidence fell in the markets. Bonds became less popular and governments ended up paying more interest than was affordable. Spain has become the recent victim of the short-sighted economic policy and now the once great Eurozone economy has had its credit rating cut and has begun talking about the possibility of a bailout.
Over in the US, the economy has been sluggish and hasn't benefited as much as one would have hoped from 'Operation Twist'. Previously used to reasonable success, many expected this economic policy of selling short-term debt and buying long-term debt to maintain a lower cost of borrowing. Many criticised this policy of not doing enough to directly boost growth and reduce unemployment. This criticism became valid at the end of the month when US Durable Goods and GDP disappointed. Now, the FOMC are ready to stand by if needs be - but it may need something a little more substantive than 'Operation Twist' this time round.
The UK economy suffered a fall from grace in April. With inflation falling at a steady rate and momentum gathering along with consumer confidence, the UK economy was expecting to see out the possibility of a 'technical recession' by posting a positive growth figure late in April. As with all things in the current economic climate, the UK economy suffered poor GDP figures which meant the recession was alive once again. Unemployment continues to rise and the Bank of England may have been caught a little off-guard with fears that perhaps not enough consideration has been given to a 'back-up' plan.
The good news is that as economies move away from the winter months and towards the summer, economic activity tends to increase. However, it is likely that the ECB, the FED and the MPC will have to once again deliver a raft of policies that pack more punch than paper work.
He we go…
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SOURCE : http://goarticles.com/article/Goodbye-April-29th-April-FX-UK-Forex-Update/6446942/
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