Forex Go!

When I think of something manufactured, I think of something made up. So it is no surprise that when I think about the global economy, it seems like manufacturing should be a more important component. Today we have received a slew of manufacturing reports from around the globe and they all have one thing is common: that they all show declines.

This exemplifies the soft patch that the global economy seems to be going through, though we must wonder if this situation is temporary or a sign of things to come.

PMI data from China, the Euro zone, the UK, and later this morning the all show that growth is slowing. Yet inflationary pressure due to a weak US dollar still has commodities prices near highs. With massive debt owed around the globe, it appears as though we are getting ready for global stagflation.

In Australia, GDP figures came in slightly lower than expected as a result of the flooding and this was a relief to the markets as the fear was that it was going to be much worse.

Today starts the first of three employment reports here in the US, with the ADP employment change figures today, initial jobless claims tomorrow, and lastly Non-Farm Payrolls on Friday.

So there is some risk aversion in the markets to start the day, led by lower stocks and commodities prices.

In the forex market:

Aussie : The Aussie is mostly higher despite the risk aversion as GDP figures came in showing a quarterly decline of 1.2%, just missing the expectation of 1.1%. This was seen as a positive by the market, which feared that it could be worse than expected.

Kiwi : The Kiwi is mixed this morning as lower Chinese PMI figures highlight a slowing Chinese economy, and this affects the Kiwi as the Chinese import a lot from NZ.

Loonie : The Loonie is somewhat mixed today after yesterday’s BOC rate policy decision reported that they will eventually raise interest rates. This sent the Loonie higher yesterday and now the question is when and not if.

Euro : The Euro is mixed today as slightly lower than expected PMI figures and the focus on the Greek debt crisis leave the market befuddled.

Pound : The Pound is lower across the board after the biggest miss in PMI data, reporting a figure of 52.1 vs. an expected 54.1. In addition, mortgage approvals were lower to 45.2K vs. an expected 47K showing signs of economic weakness.

Swissie : The Franc is higher across the board receiving the dual benefit of risk aversion and better than expected retail sales figures.

Dollar : The Dollar is mostly lower as the ADP jobs report came in much worse than expected this morning posting a gain of 38K vs. an expected 175K. This will likely reduce the expectation of Friday’s NFP and despite the risk aversion in the markets, money flows are moving elsewhere.

Yen : The Yen is mostly higher on risk themes as the Japanese Prime Minister Kan faces a no-confidence vote over his handling of the crisis taking place in Japan. Political uncertainty is not good as Kan was seen as moving toward fiscal responsibility.

Wow, just a dismal employment change number here in the US has the markets spooked about what Friday’s NFP might be. With many areas of the economy weakening, the possibility of QE3 may be back on the table.

With the theater taking place in Washington DC over raising the debt ceiling, the inability of politicians to get us back on the path to financial responsibility will cause this situation to stagnate further.

Should Bernanke continue with the misguided belief that further Fed easing be required, then we will most certainly be on our way to stagflation. Let’s face it, there is a time to spend and a time to save and with economic uncertainty where it is, saving is the right way to go regardless of whether or not the Fed makes it an unappealing proposition.

There is still great risk in the marketplace, whether it’s from a global slowdown or the Euro debt crisis. Do not be fooled into making irresponsible decisions just because that is what the government wants you to do!

Put your money with the financially responsible regions around the globe as they are the ones mostly likely to experience growth. A very simple way to do this is through the forex market!

Similar Posts:

• Bye-Bye Dollar!
• Stressful Situations!
• The Final Countdown!
• The Ice Storm!
• European Woes Back In Focus!