Fundamental analysis is a method of evaluating what is happening on the market right now and might happen in the future on the basis of external events and factors. For the currency market, such factors are news, economic and financial statistics, meetings of global Central banks, and speeches delivered by their representatives. Fundamental approach allows to analyze both short- and long-term perspectives.
The consequences of the crisis are doing their job, records and anti-records of macroeconomic statistics have almost become commonplace. On Wednesday the refined data on the growth of the U.S. GDP in the first quarter was released. It is noteworthy that originally weak growth in the region of 0.1% was expected, and then the preliminary data came out on the fall by 1%, which yesterday was adjusted up to 2.9%, of course with a minus sign.
On Thursday afternoon the GBP/USD pair is trading up on the background of positively revised statistics on the GDP.
So, the mood among the fans of the British pound was clearly better, as with the publication of the final figures for the UK GDP for the first quarter of 2014 the GBP/USD pair started moving up.
On Thursday morning the main currency pair keeps gaining momentum, feeling the support of the weak data submitted on the U.S. economy.
It seems that there could not have been a better gift for the euro currency than bad American statistics - the main currency pair has for so long "stamped" around 1.36 that as soon as weak U.S. statistics were released the instrument flew up. Either the investors were stuck in place in the absence of any significant drivers, or the traders have thoroughly revised their trading positions and expectations in recent days.
The main currency pair is not departing from the key figure - investors appear to conserve their strength in anticipation of next week's publication of statistics.
The poor French statistics of recent weeks have led to an adjustment of the forecast for GDP growth this year, which was downgraded by the National Bureau of Statistics from the initial 1% to 0.7%. Unemployment, according to the same estimates, will continue to remain above 10%, which is very close to historical highs. Let me remind you that the recent data on the French PMI came back below 50, which means a decrease.
Echoes of a slowdown in the euro zone are now being heard in Germany. The business activity index fell to 109.7, arriving at the low level of last December. If this index is analyzed by sector, the greatest loss was suffered in production. In general, as a result, the German GDP may show growth in the region of 2%, which in the current environment is an unattainable value for their colleagues in the currency bloc.
Recovery of the European economy is fading. For the past several months the French PMI indicators continue to stagnate, and this time the industrial and service PMI slipped to 47.8 and 48.2 respectively, which means a reduction in the economy of the Fifth Republic on almost all fronts. Moreover, although the German figures are above the cherished mark of 50, they still maintain a downward trend.
Despite the unprecedented measures taken by the ECB to deal with low inflation, the IMF considered them insufficient. In the latest report the IMF calls on the European monetary authorities to follow the example of the Fed, starting a large-scale purchase of Eurobonds in order to stimulate economic growth. IMF fears are more than understandable, despite the seriousness of the decisions taken by Mario Draghi, their effectiveness is far from obvious.