World Economy

Despite the shock of the financial crisis that hit the world since long, it is always possible to invest in the Forex currency market, the reason for which we must stay abreast of market changes and ups and downs of currencies, today thanks to the internet you can read market news in real time from your office or home.

Development of new technologies is the invasion of the Internet and the rapid circulation of information has made tracking the stock market in real time an easy task to do.

Indeed, many sites offer the possibility to follow live the parity of the currency of your choice, there are sites specializing in the stock market and forex, although the service offered by the websites of daily newspapers to Like the Figaro.

Sometimes there is a small shift of 3 to 5minute between the actual price and the price published by the website.

Without a computer or internet access will be very difficult to stay abreast of changes in exchange rates, for those who own a cell phone as they can download Iphone applications designed by specialized sites in Forex (cited above above), however it should be noted that despite the discrepancy may be, this way is very useful for some people.

There is yet another widely used solution is that news channels like CNBC market continuously or Bloomberg, these channels cover real-time quotes of the largest markets, although the currency. The only problem you may encounter is that these chains do not offer the dollar against all currencies but only against other major currencies: Dollar / Euro, Dollar / GBP, Dollar / Yen.

The U.S. dollar is the most traded currency in the FOREX market, one such strong point is its high liquidity because the greenback is not only used in the United States but in several markets around the world .

The U.S. dollar trading is possible on traditional foreign exchange markets as well on online trading platforms Forex the trader can choose between these two methods depending on the type of investment that would suit him.

Note that the ticket has replaced gold in international monetary system, despite competition from Asian currencies including the Japanese Yen, U.S. currency was enhanced by the opening of the New York Stock Exchange, a very significant consolidation who evaluated the number of transactions at several billion dollars a day.

The U.S. currency and all other currencies as it is influenced by certain circumstances including the behavior of financial markets within the United States, the reason for which must be taken it is recommended to include hours of opening and closing of market.

American markets offer the most useful information for traders and practices so they can perform operations successful.

However, European markets differentials between currencies values ​​are not very important, the stability of the European market is a real security to new traders and others who will not take many risks.

Stability and confidence are the most important benefits of the U.S. market, it has a direct impact on the American currency, to make investments on the U.S. Dollar stock options are the best ways to reach your purpose, but in this case it is not a simple investment in the American dollar but it is a pariage on a specific currency pair.

EDF and the U.S. Federal Reserve is the central bank of the United States of America, based in the capital Washington DC, it was created December 23, 1913 by act of the Federal Reserve, is under the direction of Mr. Ben Bernanke, the Fed as the main reason the establishment of U.S. monetary policy, it is also as politically independent European Central Bank.

The U.S. central bank must always ensure price stability, thereby facilitating U.S. economic growth, and regulation of banking united states.

The EDF consists of twelve Federal Reserve Bank that located in the largest U.S. cities like NY, Chicago, Boston, Dallas, San Francisco, Philadelphia ... the board is centrally located in the capital Washington DC, it should be noted that the Federal Reserve Bank of New York is the largest.

The U.S. Federal Reserve (FED) adopts its monetary policy following the meetings of the Monetary Policy Committee which is composed of the Governing Council with seven members selected by the President of the United States itself and approved by the Senate, the President of the FRB Governors of NY and four alternately. This committee meets regularly eight times a year, that is to say (every 6-7 weeks per year).

With two meetings, one in early and the other in the middle are very important. Both meetings exceptionally interesting that lasts two days allow the committee to discuss the Monetary Policy Report to Congress, that is a report on U.S. monetary policy that is delivered by the President of the Board of Governors before the Congress of the United united.

Since January 31, 2006 Ben Bernanke is the governor of the U.S. central bank, succeeding Alan Greenspan Governor of 08/11/1987 to 31/01/2006 and from 06/08/1979 to Paul Volker 08/11/1987.

In the middle of 2010, slowing the replenishment of stocks has revealed the fragility of the U.S. recovery: growth of household consumption certainly positive since the third quarter of 2009 but hampered by the effort of household deleveraging , job creation very moderate compared to previous cycles and historically high unemployment weighing on wages. The residential construction sector has stabilized since the mid 2009, but gives hope no sign of reversal in the short term. The dynamics of business investment remained anemic at the low level of capacity utilization from production.

This situation led the U.S. Federal Reserve, confronted with the limits of fiscal policy, to be announced in summer 2010 that it would renew its quantitative easing policy, through a vast program to purchase bonds State destined to weight (downward) on long interest rates. Support of economic policy in the activity was reinforced at the end of the year with the adoption of a budget compromise.

The bet is that of seeing the positive effects of support measures prevail, and a dynamic of self-sustaining recovery. Good growth figures for the fourth quarter (+0.8% versus the third quarter), the first tangible signs of improvement on the front of the employment and unemployment, and the sharp upward revision of growth prospects point in that direction. But the weak prospects for recovery in residential real estate, further debt relief, the slow growth in wage income and rising commodity prices pose risks to the recovery in the United States. The course of 2011 will be even more decisive than the pressure to reduce the budget deficit is growing. The conservation plan 4000 billion presented in early 2011 by President Obama to bring the federal deficit to a sustainable level (9.8% in 2011, 2% at the end of the decade) and is considered insufficient for the IMF, and Standard & Poor's has raised mid April 2011 the possibility of damaging the notes of the United States.

In theory, an international reserve currency must meet a number of conditions. Currency and must be anchored to a stable benchmark its program must be based on a series of well defined rules. The program must also be sufficiently flexible so that supply can meet at any time demand, which is largely defined by the evolution of international trade. Finally, the decision to issue the currency must be independent of economic conditions and sovereign interests of a particular country. Otherwise, it faces the words 'Triffin Paradox' (after the Belgian economist Robert Triffin). An international currency must, firstly, be stable, and therefore preferably not subject to speculation. This implies maintaining under control the amount of money in circulation. On the other hand, an international currency fulfills an international role. The amount outstanding must increase if there is an increased demand due to the intensification of international trade. The paradox is, however, that when the increase in the amount exceeds the increase in international demand, since it is only then that the reserve currency devalue

At the political agenda

The considerable funding implemented in the United States to end the financial and economic crisis and 'massive debt it entails - to call this paradox the agenda and bring many policymakers to fear a devaluation of dollar. Such a devaluation reported in short-term effect in that country through, and simultaneously reduces the real debt.

These are of course mainly countries with dollar reserve positions in important who fear such a scenario. This is, firstly, of the Petroleum Exporting Countries, given that oil is traded in dollars, and, secondly, the East Asian countries. These countries formed after the Asian Currency Crisis of important qualifications to be able to avoid a similar crisis in the future. It is also possible that the Chinese renminbi is undervalued, so the reserves are likely to increase more rapidly than would be the case with currency valued more evenly.

No wonder then that China - the country which holds the largest reserves, of which a considerable portion is denominated in dollars - has pleaded, as we approach the G20 summit, for the passage of a international financial system based on a defined national currency - without explicitly referring to the dollar - to create an international reserve currency in its own right. An idea already put forward by the economist Keynes, who argued after the Second World War to the creation of bancor (name given by Keynes in the international currency, ed.).

Demand from China is also supported by the fact that the reserve currency status of the dollar has contributed to the depth and global nature of the current crisis. Countries with a current account surplus does indeed have no choice but to invest their surplus savings in the reserve currency, as this currency is used in international trade and that these countries have bond markets more liquid. However, this has enabled the American consumerism and the rampant growth of the U.S. housing market to last longer than was desirable.

The U.S. stock market should maintain its momentum in the first half of 2010. The massive and continuing sales of U.S. stocks are simply unlikely, given the improvements in the economy of the United States, forecasts of low inflation and a rebound in corporate profits. Small investors and institutional investors own less than U.S. stocks. Cash held in the U.S. money market funds are significantly higher than historical norms and report very few investors. The U.S. Treasury securities have very little appeal outside of their defensive nature, while corporate bonds have become less attractive due to the narrowing their spreads. Low interest rates are prompting investors to resume risky assets.

We caution investors that the relationship between risk and return is not as interesting as in the first half of 2009 and they should expect more modest gains in the coming year. The U.S. dollar and interest rates in the short term will be to watch in 2010. It is possible that the economic activity of U.S. contracts again later in 2010. If the recovery of the U.S. economy continues, central banks may be forced to remove the stimulus and raise interest rates. Interest rates encourage continued growth, our pessimism about the U.S. dollar and optimism about our actions.

THE GLOBAL ECONOMY IS ON THE ROAD TO RECOVERY

In 2008 and early 2009, we experienced a synchronized contraction of the global economy and the worst decline since the Great Depression of 1929. We are now apparently at the heart of a synchronized recovery in the global economy dominated by China, reinforced by monetary and fiscal policies very stimulative, and saw improvements in the financial markets. Industrial production in several countries has plummeted in the last part de2008, but has since rebounded strongly. The global trade is starting to grow.

All the major developed economies show growth again, although the pace of this growth is expected to decline in the second half of 2010.

A caveat is needed: home foreclosures remain at record levels and a rise in mortgage interest rates could nip in the bud the nascent recovery of the housing market. In addition, the new attitude of frugality consumer concern. Note that U.S. consumers have a propensity to spend and the recession creates a substantial pent-up demand.

The beginning of the year could be a good idea of ​​what the future holds for the coming quarters. First, the U.S., the ISM index increased and sharper decline than expected unemployment rate brought a greater sense of optimism about economic growth. This further reduces the chances of a third wave of purchases of government securities by the Federal Reserve (Fed). The year also began with a surge of financial fears in the eurozone. Although steps have been taken to support countries in difficulty possible, investors should remain on the alert for some time, with effects that underpins the euro and financial markets. Finally, the increase from December 26, Chinese interest rates shows that China will take extreme measures to avoid economic overheating and excessive increase in its inflation rate. The Chinese exchange rate has also crossed the new year to a low of 17 at 6.59 yuan / U.S. $: the gradual appreciation of the yuan against the U.S. dollar is likely to continue.

LOWER RISK SHOULD discriminate against the greenback, BUT NOT NOW

During the recession, investors who have a higher risk aversion have massively turned to assets denominated in U.S. dollars, which benefited the greenback against most other currencies. Now that the crisis is behind us and that investors gradually reconnect with riskier investments, often in other currencies, it is the reverse process occurs for the U.S. currency.

THE END OF THE SECOND PROGRAM WILL HELP THE QUANTITATIVE AMERICAN CURRENCY

The Fed announced on 3 November a second wave of buying of U.S. government securities to stimulate the U.S. economy and increase inflation.

Pending the official announcement of the new measure, the dollar depreciated markedly. Quantitative monetary policies underpin a more abundant supply of liquidity and interest rates low for an extended period. They also reduce investor confidence in the currency. Indeed, there is a risk that inflation rises too when things go wrong and it causes a significant loss of purchasing power of the currency. This risk depends, however, credit growth resulting from the policy quantitatively. In this regard, the slow growth of credit outstanding in the U.S. is worrisome for the U.S. dollar in the short term.

Around the $ currency Americans, a large informal currency area has recovered since the currency crises of the late 1990s. It consists of countries using $ as an anchor currency, reference and rules of international trade, reserve and intervention. This area includes Central and South Americas, the Middle East, much of Asia and Oceania. S The above tables illustrate the global role of the dollar in parallel to that of the €. Admittedly, only a few currencies are formally linked to $: the $ Hong Kong and the Indian rupee, respectively by a peg and a managed float.

The Yuan (or Renminbi, currency of the People) Chinese is linked to a basket of currencies ($, €, Yen, Won and others) with a fluctuation band of + / - 3% around a central rate, it own reassessed every day, is actually a crawling peg against the basket. Small Central American countries are dollarized (using the dollar as national currency).

Surprisingly, since the currency crises of 1997 in Southeast Asia and Latin America in 2001, many currencies have again become stable de facto against the $. Asia:

Indonesian and Indian rupees, the Singapore dollar. The Thai baht and Korean won tend to appreciate. The Malaysian ringgit, Philippine peso and Thai baht are managed float or have a target effective exchange. In Latin America the real Brazil found its level of early 2000. The currencies of the Middle East are perfectly adjusted to the $: Jordanian dinar or Saudi riyal.

Two reasons for these links more or less closely with the voluntary and sometimes referred to as Quasi $ Bretton Woods. On the one hand, the importance of their trade with the United States or other countries in the dollar zone. More importantly, in the absence of dominant regional currency, anchor its currency to the $ is for a country a way to avoid the wretch surenc regional currency and stabilize currencies in the area between them along the lines of Bretton Woods in one form or another (peg, sliding or not, managed floating). This one seems so important in Latin America and Asia.

In particular, central banks in Asia, Japan and China in particular, intervened massively to stabilize their currencies against the $ in the post 1997 crisis.

The Chinese yuan has appreciated slightly since its managed float that could be the start of a general appreciation of Asian currencies. This will be discussed further.

Experience has shown that these stabilities obtained with arbitrary parities may often lead to sudden and severe currency crises. Especially on the occasion of sharp fluctuations of $ isolated or a variation of one of them challenging the conditions of regional competitiveness. The crises in Southeast Asia in 1997 were partly the consequence of the dollar since 1995, the Russian ruble crisis in 1998 and that of the Argentine peso in 2001 come from the contagion from one area to the other. Note that Europe remained protected from these attacks and known at that time a strong growth.