Daily Market Review - 07/24/2014

EUR/USD

So we see that the line has been broken from either direction. The first crossing was evidently a continuation of the big trend, while the last bounce is most probably a correction of the main trend. So regardless of the green candle sticks on the chart the outlook is bearish.

USD/JPY

An ascending triangle appears to start its transition into a symmetrical one. The pattern suggests consolidation, which will be most likely followed by a continuation of the prior bearish trend.

GBP/USD

Apparently correction of the bullish trend is going to take its time. The down slanting trend line is quite steep implying the strength of the trend. Therefore the forecast is appropriate.

Market Overview

Recovery is taking place in Spain, the fourth economy of Europe by size. According to preliminary assessments of national Central Bank in the second quarter GDP growth constituted 0.5% in comparison with the 1st one. It had also demonstrated positive dynamics at the level of 0.4% of the volume of economy in the 4th quarter of the last year. If we compare second quarter of 2013 and 2014 then we’ll see growth by 1.1%.

We have to mention that the figures are significantly higher than European growth pace, which tend to depreciate because of record low inflation. France for instance is plunging in stagnation, showing forecasts on GDP growth, which this year will be at 1.3% level, and next year will reach 2%.

At that it will be quite hard to keep this growth pace. The thing is that during the years of crisis under the pressure of Brussels and Berlin South European states had to undertake a serious spending cut. Naturally the first thing to cut were investments in infrastructure and scientific projects. In the long run it is decreasing the base for growth, but during debt crisis only a few listen to economists, who had been warning about that.

In light of that it is worth mentioning a survey of French economists, who have found that reduction of governmental expenditures for infrastructure and science by 1% of the GDP consequently lead to the fall of GDP itself by 1.5%. The other reason for such claim is decline of inner demand, what negatively affects volumes of tax inflow, where deficit issues begin to emerge.

Economic Calendar

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