Major Market Movers: Another Downbeat Week!

Daily Forex Fundamentals | Written by Crown Forex | Oct 24 08 08:28 GMT |

The week is coming to an end and the outlook has merely only darkened in the past five days as Europe is pricing a recession, with further signals pointing south and financial markets continue to be wrapped with heightened alertness and volatility. Investors are pricing more rate cuts to be seen in the US, UK and the Euro Area those three majors in specific, which with dwindling outlook for profit growth for corporations stocks dwindle and the sole winner is the Japanese Yen as it surged to a 13 year high against the dollar on risk aversion and reassessment of risk and outlook, as carry trades lose all the appeal with falling stocks, commodities and now yields on majors especially if we take the Aussie and Kiwi as an example! Manufacturing and services readings form the euro zone today are to highlight continued contraction in the sector with falling demand and spending. While the most crucial in the European session today is to be the advanced third quarter GDP estimate from the United Kingdom which is to show the economy started to contract after flat output in the previous three months. It is expected with a contraction of 0.2% as the economic slowdown intensified in UK with curtailed consumer and business spending affected by both the tight liquidity and surging headline inflation. While the housing market added more negatively to the economy as it spread the lack of confidence into the economy. While looking at the sector that covers nearly 73% of growth, the services sector, its contractions weighed negatively with the destruction that halted the financial sector has a saying in the recession the UK is falling into for the first time since the recession of the early 1990s! Clearly as major economies falter the negative vibe is spreading and with their markets crippled emerging nations are incapable of picking the slack on their own as they deeply depend on exports! We saw china grow at the slowest pace in five years in the third quarter, and now South Korea reported the lowest in four years which drove their stock market indices down nearly 10%! Adding to that India is shifting to a Dovish stance to fight the aftermath of the worst credit crisis in the century. So here we are heading into the recession at a global scale and the prevention is quite late to such a crisis yet efforts from central bankers and governments are actually designed to limit the fallout and to prevent a severe and protracted recession in their nations and the world, especially considering the US efforts as they head to deliberate the second fiscal stimulus to revitalize the economy! Their efforts have spread from financial markets to Americans yet still the progress is in play. Bernanke has assured that the steps takes to stem the total collapse of the banking system will NOT prevent the severe economic downturn yet that does not mean they are not working at arms length to help unfreeze the gridlock in financial markets to reach at a point were banks do their part in helping the economy grow with supplying credit. Today the Treasury might be announcing the new round of measures taken as part of the $700 billion Emergency Economic Stabilization Act of 2008, as also know the Troubled Asset Relief Program (TARF), as they are expected to help regional US banks to cope with credit freeze as part of the announced $250 billion designed to recapitalize financial institutions as the first step was $125 billion for the nation's biggest nine banks. US officials are trying to contain the damage at base, as they aim at halting mounting foreclosures and falling home prices and sales, yet a clear sign of bottoming unfortunately has not been seen, especially with the new round of tightened credit markets! Though today we are waiting for existing home sales in September with a rise of 0.8% to an annualized 4.95 million units from 4.91 million yet that is to me merely a delayed count for rising sales in August according to what pending home sales showed, as September was a turmoil month and lenders tightened their available mortgage deals and Americans avoided the markets following the allowed bankruptcy of Lehman Brothers that led us to were we are today! This week was another to go on the records in the worst year for global financial markets and economies, as to me I am heading to call it the year that laid the corner stone to reformation of the capital market theory!!! 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