1. Investopedia's September 2012 Forex Outlook - Introduction
  2. Investopedia's September 2012 Forex Outlook - Macroeconomic Highlights
  3. Investopedia's Forex Outlook For September 2012 - Upcoming Events To Watch

U.S. Continues Its Slow, Jobless Recovery
The U.S. economy showed signs of improvement during August, but the recovery is progressing more slowly than many economists and investors had hoped. The slower-than-usual growth is due largely to stubborn unemployment, but gains in corporate profit have helped offset some of that slowdown, particularly by boosting the stock market over the past few months.

Employment figures showed an uptick, but remain below the levels needed for sustainable net job growth. In early July, the U.S. generated a better-than-expected 163,000 jobs, led by unexpected gains in the manufacturing and business services sectors. However, the official unemployment rate hit 8.3%, up from an 8.2% reading during the previous month, as the U.S. population expanded.

Despite the stagnant employment situation, some leading indicators showed promising signs of improvement. Consumer sentiment edged up to a better-than-expected 73.6, which could indicate that consumers are ready to spend more. Moreover, a composite index of ten economic leading indicators showed a 0.4% improvement, compared to a 0.3% contraction in July. But still, the Federal Reserve is far from opposed to using additional easing to help the economy.

SEE: 7 Ways To Position Yourself For Recovery

European Yields Fall, but Uncertainty Remains
Caterpillar Inc. CEO Doug Oberhelman perhaps said it best when he noted in mid-August that the global economic outlook is more uncertain now than it was in late 2008 due to the politics involved in the eurozone crisis. Despite numerous efforts to devise a unified policy, the region has fallen short of a comprehensive package that would effectively calm the financial markets.

While the euro has been edging higher throughout the month, many economists question the eurozone's resolve in implementing necessary structural reforms. Moody's, one of the three largest ratings agencies in the world noted, "the correction [in the eurozone] is at best only halfway complete, depending on the country in question, and could take several years."

Bond yields have also improved throughout the region, after speculation arose that the ECB was exploring the idea of a cap on government bond yields. Spanish bond yields fell to 6.22% by mid-August, while Italian and Irish bond yields also moved sharply lower. The expectation of bond buying had also halved the yields on two-year Spanish bonds since July.

SEE: How Eurozone Debt Benefits Americans

Japan's Economy Shows Signs of Slowing
Japan had been a relatively safe bet for investors, after reporting several quarters of robust growth, driven by reconstruction spending. However, the growth proved difficult to maintain, as the country's second-quarter GDP fell to an annualized 1.4% compared to economist forecasts of around 2.3% and a 5.5% annualized reading during the first quarter.

The Bank of Japan now forecasts a 2.2% expansion in GDP this business year and a 1.7% increase in the fiscal year beginning April 2013. Economics Minister Motohisa Furukawa noted that the country's economy continues to recover, but is feeling the effects of the European debt crisis and slowing overseas growth, adding that the government will consider its options.

Britain Stays the Course for Now

Britain remains in a precarious situation after experiencing the deepest recession since the 1920s and the slowest recovery and budget deficit on record. While the bond markets haven't lost faith in the country and deflation remains under control, there's concern with escalating problems in the eurozone and a lack of confidence in George Osborne's policies.

During its last meeting, the Bank of England opted to keep interest rates at a record low and keep its quantitative easing cash stimulus program set at $584 billion. Rising inflation and negative GDP output could force the central bank to increase its QE program by 50 billion pounds, according to some economists, which could pressure the pound.

SEE: The Importance Of Inflation And GDP

Investopedia's Forex Outlook For September 2012 - Upcoming Events To Watch

Related Articles
  1. Markets

    Investopedia's August 2012 Forex Outlook: Macroeconomic Highlights

    The global economy took another turn for the worse in July 2012, as economists feared that Spain may require a eurozone bailout. With growth in the United States also failing to impress the financial ...
  2. Trading

    Investopedia's Forex Outlook For August 2012

    You need to know these major forex events for August.
  3. Markets

    Investopedia Forex Outlook For April 2012 - Asia, U.K. And Switzerland

    Asian Markets Remain Volatile after China's Move Figure 5 - China GDP Growth Rate (%) Asian markets have been quite volatile over ...
  4. Trading

    Investopedia's Forex Outlook For November 2012

    Here's a look at current and upcoming events that may influence the FX markets.
  5. Markets

    Investopedia's Forex Outlook For November 2012: Macroeconomic Highlights

    The global economy has continued its slow recovery, but the bullish effects from September are beginning to wear off. The U.S. experienced a slew of positive economic data, but the three-month ...
  6. Markets

    Investopedia's Forex Outlook For May 2012: Japanese and British Economies

    Japan Rebuilding Should Boost ProspectsJapan's economy was one of the few economies in Asia to experience a decline in its real GDP last year of 0.7%. Economists believe that this rate will improve ...
  7. Markets

    Investopedia's Forex Outlook For May 2012: Macroeconomic Highlights

    The global economy continues to recover slowly, as the U.S. recovery picked up steam and the Eurozone crisis stabilized. Despite these promising signs, the recovery has been slow and several ...
  8. Markets

    Investopedia's Forex Outlook For March 2012: U.S. Economy News

    U.S. Picks Up Steam, but not the DollarThe U.S. recovery appears to be picking up steam over the past month, with unemployment down, consumer confidence up and inflation falling. Many other indicators ...
  9. Markets

    Forex Outlook For December 2012: Macroeconomic Highlights

    The global economy continues to tread water as many major developed nations are either growing at a very slow rate or, in Europe and Japan's case, are experiencing a slowdown. Monetary policies ...
  10. Markets

    Investopedia's Forex Outlook For May 2012: U.S. Economy

    U.S. Shows Signs of Slow GrowthThe U.S. economy has shown tangible signs of improvement over the past couple months. From labor market improvements to credit expansion, there is little question ...
Trading Center