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Forex trading during recession: U.S. GDP undermined investor confidence and scared away buyers of risky assets

igor m

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capital forex trading

Important news for capital forex trading. The euro and the pound rose, while the dollar lost all its ground after the recessionary drumbeat of the US economy got louder. The other day a report came out showing that the US economy contracted for the second quarter in a row amid a sharp drop in consumer spending and interest rate hikes by the Federal Reserve. However, do not rush to buy Euros and British Pounds, as nothing good is about to happen anytime soon for you to really talk about a rise in market sentiment.

Forex trading during recession

According to data from the Commerce Department, gross domestic product fell 0.9% year-on-year after a 1.6% decline in Q1. Personal consumption, the biggest part of the economy, rose only 1%, less than in the previous period. 

This data added headaches not only for the Federal Reserve but also for President Joe Biden, whose political career is now in jeopardy. In addition to the slowdown in household spending, the report also showed a decline in business investment, a drop in government spending and a drop in home prices. Inventories also had an impact on GDP, and only the narrowing trade deficit had a positive effect on the indicator.

The key core demand indicator, which excludes trade and inventory components, fell 0.3% in the second quarter, compared with an increase of 2%.

Quite expectedly, high inflation undermined Americans’ purchasing power, and the Fed’s tighter monetary policy weakened an interest-rate-sensitive sector such as housing. The contraction of the economy for the second quarter in a row clearly indicates that the U.S. has already entered a recession, and the question now is not when, but how long it will be observed.

Economists had expected GDP growth of 0.4% and an increase in consumer spending of 1.2%. The data also showed that spending on services accelerated to an annualized rate of 4.1%, while spending on goods declined 4.4%. Housing investment fell 14% year-over-year.

The situation on the currency market: the disadvantages of forex trading

This is definitely putting pressure on the US dollar, but it is hard to say how much longer we will see the euro and the British pound rising vigorously. The euro zone economy is one step away from recession, as is the UK economy, where the ongoing struggle with the cost of living crisis on the back of high inflation continues. Eurozone consumers have yet to face the sharp rise in interest rates that the European Central Bank began this month. The difference between forex trading and stock trading can be clearly seen in what is happening. It is much harder to make predictions here. 

What will happen to forex trading during a recession? The fixing of the Euro at 1.0170, gives buyers of risky assets an excellent chance. Now, the whole focus has shifted to the nearest resistance, 1.0220. The break-up of this range will give confidence to the buyers of risky assets, which will open a direct way to the high at 1.0273, which defines the further uptrend of July 14. 

Breakdown of 1.0273 will open the possibility of updating to 1.0320 and 1.0370. In case the Euro declines, it is very important for buyers to show something around 1.0170; otherwise the pressure on the trading instrument will only increase. If you miss 1.0170, you can say goodbye to hopes of recovery, which will open a direct way to 1.0130 and 1.0090. Break-through of this support level, probably, will increase the pressure on the trading instrument, opening the possibility of a return to 1.0040.

The pound is at the new local highs and the most important thing is to hold the support at 1.2200 today. If it succeeds, we can expect a larger movement of the pound upwards and speak about updating from 1.2250, with further exit at 1.2285 and return to 1.2330. A break through this range will easily take the pound back to 1.2400. If 1.2200 is empty, we are likely to correct heavily to 1.2160, with the prospect of a test of the larger 1.2110, where the bottom of the current rising channel passes.

Forex trading disclaimer: Remember that when you make decisions in the currency market, you must make your own decisions and not listen to others’ calls to action.



Forex

ITB (International Trading Brachium) Broker Announced Its YouTube channel

igor m

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ITB (International Trading Brachium)

(Mahe, Seychelles-March 08, 2023) – ITB BROKER, LLC, an international forex broker, has announced that with our community growing, we believe that this will be the most effective medium to communicate with and so, we’re proud to announce the launch of ITB YouTube channel .

When a picture speaks a thousand words, How about a video?

  • Throughout our community building initiative, we strongly believe in video as our means of communication. Video has played a pivotal role in describing our futuristic services to our audience and in communicating our disruptive vision to potential traders or investors.
  • Over the next few weeks, we will be launching interesting videos on upcoming ITB features, bonuses, partnership or IB announcements and financial market expert interviews.
  • YouTube is a great place to pick up forex trading tips and learn how to use them in the real world.

There are a number of YouTubers that make great educational videos, perfect for beginners or those considering taking up forex trading. ITB group with over 10 years of financial experience provides you with useful tips and hints of forex trading via its  YouTube channel.

About ITB

ITB Broker or ITBFX is a leading provider of online foreign exchange (FX) trading, CFD trading, and related services.

Founded in 2017, the company’s mission is to provide enthusiastic traders with access to the world’s largest and most liquid market by offering innovative trading tools, applying excellent trading platform, meeting strict financial standards, and striving for the best online trading experience in the market.

In addition, ITB offers educational courses on FX trading and Cryptocurrencies on academy section of ITBFX website.

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Forex

U.S. budget deficit totaled $262 billion in February 

igor m

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U.S. budget deficit

According to a report from the U.S. Treasury Department, the U.S. budget deficit in February was $262,434 billion compared to a $38.8 billion deficit in January. The Dow 30 also had problems.

Analysts at DailyFX suggested that the nation’s budget deficit for February was expected to be $256 billion. A year earlier, in February, the U.S. posted a budget deficit of $216,590 billion.

According to the GAO report, U.S. government spending rose 3.5 percent year over year last month to $524.548 billion, while revenue, in contrast, declined 9.5 percent to $262,114 billion.

Earlier, the U.S. edition of the Washington Post published an editorial stating that the new draft budget proposed by the Biden administration undermines U.S. national security and its ability to invest in the future, because it suggests a further growth of the U.S. national debt.

The WP editorial board noted that the new draft budget assumes a $2 trillion budget deficit, including due to the high cost of providing health insurance to the elderly of the baby boomer generation.

Earlier we reported that the EU has agreed to reduce energy consumption by 11.7% by 2030.


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Forex

The EU has agreed to reduce energy consumption by 11.7% by 2030

igor m

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reduce energy consumption

The European Union has agreed to reduce the bloc’s energy consumption by 11.7 percent by 2030, Reuters reported.

“This will mean a real change in favor of the climate and to the detriment of Putin,” the Danish Niels Fulsang, the European Parliament’s lead negotiator, told the agency.

Initially, in 2021, the EU proposed to reduce consumption by 9%, but in May 2022, against the background of events in Ukraine, increased the target to 13% to quickly abandon Russian energy, writes Forbes. The European Parliament considered it necessary to reduce consumption by 14%. The DAX Index also had problems.

Some EU countries have continued to insist on a 9% cut. An all-night negotiation between the EU and the European Parliament resulted in a compromise: the energy consumption of EU end-users, such as households and businesses, must be 11.7 percent lower than expected in 2030.

The agreement must pass final approval by the European Parliament and EU countries before it can become legally binding.

Earlier, we reported that consumers expect lower inflation in the eurozone, higher wages.

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