The International Monetary Fund (IMF) said today that a recession in the Eurozone would likely reduce China’s actual growth by about 50 percent of the current projection. That would place China’s growth for 2012 at roughly 4 percent should the Eurozone crisis devolve into a recession.

It is estimated that China needs to maintain yearly expansion in the range of 8 to 10 percent to meet the needs of its emerging workforce. While growth of this magnitude would result in crushing inflation in most economies, China has sufficient capacity to absorb this rate of growth.

This is due to the migration of China’s rural population to the fast-expanding rural centers in search of work. In fact, it was only in this past year that, for the first time in the nation’s long history, China’s urban residents finally outnumbered the rural population.

Still, this is not to say that inflation has not been a concern. In 2011, China’s economy grew by 9.2 percent even after the government acted to ease price inflation. Food staples in particular rose sharply in the past year far outpacing the rate of wage increases. Property values have also climbed forcing the government to implement a series of measures to curb speculation.

Greece Moves Closer to Default

Underscoring today’s IMF’s warning is the latest news indicating that Greece has failed to come to terms with European officials on the implementation of a second emergency funding package. Several deadlines have been missed to reach an agreement but time is becoming an ever-greater concern. Greece has a 14.4 billion euro ($10.9 billion) bond due on March 20^th and time is running out to get the funding in place and prevent a default.

The failure to agree on a new debt deal is being blamed on Greece’s inability to get the leaders of the three main political parties to consent to acceptable terms. Still, progress has been made in some areas; the Greek leaders have tentatively agreed to spending cuts equal to 1.5 percent of the countries Gross Domestic Product.

Greece’s hesitance is understandable given the degree of public opposition the proposed spending cuts. The country’s largest public sector unions have already threatened to impose a nation-wide strike expected to bring the country to a virtual stand-still later this week.

Regardless of the public hostility, European leaders are clearly losing patience with the Greek government’s continued foot-dragging. French President Nicolas Sarkozy was quoted as saying that European governments “want this accord” at a press conference in Paris earlier today.

“Greece’s leader have made commitments and they must respect them scrupulously,” warned Sarkozy. “Europe is a place where everyone has their rights and duties. Time is running out, it needs to be concluded, it needs to be signed.”

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

USDCHF remains in downtrend from 0.9594, the price action from 0.9114 is treated as consolidation of downtrend. Another fall towards 0.8900 is still possible after consolidation and a breakdown below 0.9114 will signal resumption of the downtrend. Key resistance is at 0.9350, only break above this level could indicate that the fall from 0.9594 has completed at 0.9114 already, then the following upward movement could bring price back towards 0.9594 previous high.

Daily Forex Forecast

USDCHF broke above the upper line of the downward price channel on 4-hour chart last Friday, suggesting that a cycle bottom had been formed at 0.9114, and lengthier consolidation of the downtrend from 0.9594 is underway. Range trading between 0.9114 and 0.9249 would likely be seen in a couple of days. Key resistance is at 0.9350, as long as this level holds, we’d expect downtrend to resume, and one more fall towards 0.8900 is possible after consolidation, only break above 0.9350 could signal completion of the downtrend.

Forex Signals

Gold Trading Analysis
Reversal At 61.8% Fibonacci Retrace

• Gold (daily chart shown below) has printed the largest single day decline in over 4 weeks and dropped one percent after the strong U.S. NFP data killed near term expectations of additional financial stimulus from the FED.  This has seen the formation of a bearish engulfing candle on the daily timeframe which is signaling potential for near-term gold downside price action.
• Gold (CMX) has seen an increase in net longs from 142,223 on 21st January to 172,359 on the 31st january.  It should be noted that this does not reflect the change in sentiment seen on Friday as the report lags and is reflecting positioning on the previous Tuesday.
• Gold has likewise  closed slightly down over the week after the NFP fuelled sale of the precious metal eroded any earlier gains.
• Stronger jobs based data is indicating that QE3 may not be needed at this point and this was dollar positive news and therefore Gold negative.
• The drop was 127% of the ADR over 60 days as price dropped from an earlier high of 1763.15 to a 1723.65 close.
• The high at 1723.65 was just below the 61.8% Fibonacci retrace of 1920.75 – 1522.6 as highlighted in our previous gold update.  This area has confluence with price structure support and has once again proved to be strong resistance.

Forex trading and trading in general holds a high degree of risk and may not be suited to all investors. A traders degree of experience should be cautiously weighed before embarking on trading the forex market. There is always a chance of losing some or all of your initial investment / deposit, so do not invest money which you can’t afford to lose. The high risk that is involved with currency trading should be known to you. Ask for advice from an independent financial advisor before entering this market.Any comments made on Forex-FX-4X or on other sites that have received permission to republish the content originating on Forex-FX-4X reflect the opinions of the respective individual authors and do not necessarily represent the opinions of any of Forex-FX-4X authorized authors. Forex-FX-4X has not verified the accuracy or factual evidence of any claim or statement made by any author. Omissions and errors may occur. Any news, opinion, analysis, price quote or any other information contained on Forex-FX-4X and permitted re-published content should be taken as general market commentary only. This is not investment advice. Forex-FX-4X will not accept liability for any damage, loss, including without limitation to, any profit loss, which may either arise directly or indirectly from use of such information. Copyright 2011 Forex-FX-4X. All rights reserved.

Source: ForexYard

The USD posted gains across the board on Friday, following the release of a better than expected US Non-Farm Payrolls figure. The US added 243K jobs in January, a significantly better number than the forecasted 150K. The positive jobs report resulted in the US Unemployment Rate dropping 0.2% to 8.3%, its lowest level in three years.

Following the release of the employment figure, the dollar rallied against virtually all of its currency rivals, including the euro and Japanese yen. The EUR/USD dropped as low as 1.3065, before staging an upward correction. The USD/JPY shot up over 50 pips, reaching as high as 76.72. The bullish dollar temporarily eased fears that the Bank of Japan (BOJ) would soon intervene to limit yen growth.

Whether or not the dollar is able to maintain its bullish momentum next week, is largely dependant on euro-zone news. Specifically, investors will be closely watching Greece to see if that country can successfully come to a debt swap agreement with its investors. Additionally, rumors that Portugal could be on its way to defaulting on its debt have weighed down on the common currency. Should any positive euro-zone announcements be released next week, investors may shift their assets toward riskier currencies and give the euro a boost.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

In Forbes magazine’s rankings of the 50 most valuable sports clubs in the world, a majority are NFL clubs. But how can a sport with limited worldwide appeal outperform clubs that play the other kind of football (soccer), which marketing experts say has at least 10 times as many fans worldwide?

One answer lies in the very business model of NFL clubs, which requires all clubs to share revenue and accept competitive regulation.  It is a profitable form of socialism, and one that European football clubs may be heading towards.  Beginning with the 2012 season, UEFA will implement the Financial Fair Play Rules in hopes of balancing both team budgets and league competition.

Kurt Badenhausen of Forbes, Mike Davis and Richard Alm of SMU and Brett Daniels of the Dallas Cowboys talk about why this form of “socialism” is so profitable and whether it could ever work in the context of European football.

Producer/host:
Brian Woodward

Additional reporting:
Lasse Engelbrecht Jensen
Carina Møller Jensen

Legal information

Video courtesy of en.jyskebank.tv

Since the early days of the Eurozone debt crisis, insiders have identified China and its $3.2 trillion in foreign reserves as a potential contributor to a Eurozone bailout fund. Today, Premier Wen Jiabao gave markets reason to believe this may yet be the case when Wen suggested that China is considering the options for how it may contribute to keeping the Eurozone together.

The original European Financial Stability Fund (EFSF) is scheduled to be superseded by the European Stability Mechanism (ESM) later this year. The ESM is expected to provide 500 billion euros ($656 billion) to the establishment of a bailout fund. Wen did not confirm whether  China would contribute to the ESM directly, but this does seem to be the most logical way China could help support the region.

China Desires a Stable Euro and Eurozone

It is in China’s interest to help stabilize the Eurozone. It is estimated that up to one quarter – or roughly 620 billion euros – of China’s foreign exchange is held in euros. Shielding this investment from further decline is obviously of vital importance to China.

However, China also wants to see prosperity return to the region as quickly as possible to protect its export interests.  The wider European Union is China’s largest export market with 282 billion euros worth of goods exported in 2010. Sales for 2011 continued to increase but at a slower pace and there is a growing worry that sales could soon start to decline.

German Chancellor Angela Merkel arrived in China today to kick off a three-day visit aimed largely at reassuring China that European leaders have a handle on the debt crisis.

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog

USDCHF stays in a downward price channel on 4-hour chart, and remains in downtrend from 0.9594, the price action in the range between 0.9114 and 0.9249 is treated as consolidation of downtrend. As long as the channel resistance holds, we’d expect downtrend to resume, and another fall towards 0.8900 is still possible. Key resistance is at 0.9350, only break above this level could signal completion of the downward movement.

Daily Forex Forecast

The December unemployment rate for the 17-member countries comprising the Eurozone rose to the highest level since the Euro was introduced in 1999. For the month of December, the rate for the entire region rose to 10.4 percent after the November result was similarly revised upwards one tenth of a percent from the originally-reported 10.3 percent.

A total of 16.5 million people across the Eurozone are now out of work. This is an increase of three quarters of a million in the past year alone. But the pain is not being felt equally amongst all Eurozone nations.

Greece and Spain recorded the greatest increase in unemployment over the past year. At 22.9 percent, Spain had the highest unemployment rate for the entire area with Greece not far behind at just over 19 percent. Portugal watched helplessly as its unemployment rate continued to climb reaching 13.6 in December.

Comparing the results of these southern countries with the northern jurisdictions reveals the gap between the north and the south. In Germany, for instance, December’s unemployment rate actually fell more than expected to 6.7 percent – the lowest since German was reunited. Meanwhile, Austria and the Netherlands continued to record the lowest Eurozone unemployment at just 4.1 and 4.9 percent respectively.

Unemployment to Increase in Some Eurozone Countries

Looking ahead to the coming year and beyond, there is every likelihood that the situation will actually worsen. As even the most casual observer knows, the Greek government is presently under intense pressure to implement the infamous “austerity” measures to address the country’s widening deficit.

The massive spending cuts targeted to meet the goal of ultimately eliminating the deficit will require Greek authorities to eradicate a significant number of government jobs. Other countries including Spain, Portugal, and even Italy will be forced – to some degree at least – to follow the same agenda in order to get a handle on overall spending.

Widespread job losses will not be restricted to just the government, however; the private sector too will be forced to reduce costs as companies struggle with falling sales. In the face of the continued uncertainty and growing fears of recession, companies will postpone or even cancel all but the most essential new projects, delaying new hiring accordingly.

Again, it will be the southern countries that will feel the effects of this most keenly.

Article by forexblog.oanda.com

Source: ForexYard

The USD came off a six-week high against the euro in trading today, after news that Greece had once again failed to come to reach a debt swap deal with its creditors. Earlier in the day, the EUR/USD reached as high as 1.3231 before investors began selling off the pair. The AUD/USD also saw a substantial drop, falling well over 100 pips during the European trading session. The greenback failed to move up against the yen, as investors chose to keep their funds with the safe-haven Japanese currency.

Turning to tomorrow, dollar pairs are likely to be influenced by any announcements out of the euro-zone which may lead to further risk aversion. Traders will want to pay particular attention to any news out of Greece. While a Greek debt swap deal is likely to be finalized by the end of the week, safe-haven currencies may continue to go up until a final agreement is announced.

With regards to the rest of the week, traders will want to keep in mind that a batch of US data is forecasted to have a significant impact on the markets. Wednesday’s ADP Non-Farm Employment Change figure, as well as the ISM Manufacturing PMI are both considered valid indicators of the current state of the US economy. Furthermore, a speech from the Fed Chairman on Thursday, followed by the Non-Farm Employment Change figure on Friday, are both likely to generate substantial market activity.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.