1. Investopedia Forex Outlook For February 2013: Macroeconomic Highlights
  2. Upcoming Events to Watch: Upcoming Events To Watch
The global economy remains on relatively solid footing going into February, after U.S. markets rose to new highs thanks to a debt deal and Japan introduced new stimulus in January. While most trader attention is focused on Japan at the moment, potential improvements in the eurozone and an ongoing recovery in the United States shouldn't be discounted.

SEE: A Primer On The Forex Market

Macroeconomic Highlights
U.S. Economy Recovery Gains Steam
The U.S. economy continues to see positive signs of growth, with the U.S. Federal Reserve's Charles Evans projecting 2.5% growth in 2013 and 3.5% growth next year. At the same time, Mr. Evans also forecast that the U.S. unemployment rate would fall to 7.4% this year and then again to 7% next year, which would further normalize the economy over time.

Judging by comments from Mr. Evans, traders should watch for payroll employment figures to increase by 200,000 each month for a number of months in order to confirm such a durable recovery, which would mark an end to one of the most troubling aspects of the slowdown. But even with improvement, low interest rates should keep the dollar at bay for now.

SEE: The Hidden Truth Behind The U.S. Economic Recovery

Eurozone Bottom May Be Near
The eurozone may have posted some bearish figures in January, but many economists agree that the region may have bottomed. For instance, factory output in the eurozone fell for a third straight month in November, but production of machinery used to make other goods rose 0.7% over the same period, suggesting that future business is set to improve.

At the same time, the Organization for Economic Cooperation and Development's (OECD) composite of leading indicators also suggested that growth would accelerate. The indicator was unchanged in November at 100.2 for the second straight month, suggesting that Italy, Germany, France and the euro area as a whole are stabilizing and could help boost the euro

Japan Hopes to Revive Economy
Japan is perhaps one of the most interesting stories in January going into February, after Prime Minister Shinzo Abe took over the country's leadership position. Early last month, Mr. Abe announced a $117 billion stimulus package aimed at improving economic growth through increased spending on public works, disaster recovery and aid to small businesses.

The move put pressure on the Japanese yen against all major currencies and helped the country's equity markets rally. Many investors, however, worry about the country's excessive debt, which has grown from 60% to 220% of GDP over the past two decades. While the effects are yet to be seen, it could become a short-term solution to a long-term problem.

Britain's Economy Remains Weak
Britain's economy remained in a weakened state last month, as its government stuck to a harsh austerity plan that hurt growth. Compounding these concerns is growing uncertainty around the country's ties to the European Union, which could potentially create higher unemployment at the worst possible time. The country has the potential to enter into a triple dip recession.

While these concerns may have held back the sterling against the euro, the country's currency has appreciated on many other fronts. In particular, Bank of England comments on the country's diminishing export prospects could lead to potential monetary policy action, after the pound gained nearly 3.66% since the beginning of the year in aggregate.

SEE: Spotting A Forex Scam

Upcoming Events to Watch: Upcoming Events To Watch
Related Articles
  1. Insights

    No Exit: What Could Happen If the Eurozone Breaks Up?

    There is no exit strategy for nations in the eurozone or the EU because most members acknowledge that they are far better off together than apart.
  2. Investing

    Which Countries Will Drive Global Growth in 2016?

    Given the volatility that has already shaken the global economy, the world's largest economies will be leaned on to stimulate growth in 2016
  3. Trading

    5 Economic Reports That Affect The Euro

    There are hundreds of reports affecting the FX market. Find out which ones are the most relevant for traders.
  4. Insights

    5 Other Countries Affected By A Troubled Europe

    These countries have significant trading relationships with European countries, and could feel the brunt of a euro collapse.
  5. Insights

    Four Factors Supporting the Global Economy in 2016

    The global economy enters 2016 on a promising note, with the growth pace forecast to be the fastest since 2011, thanks to a combination of four potent factors.
  6. Trading

    What Forex Traders Need To Know About The Yen

    The Japanese yen possesses some unique qualities that traders should know before jumping in.
  7. Trading

    The 6 Signs Of An Economic Recovery

    For all the talk of whether the economy is recovering or sinking, what should a recovery actually look like?
  8. Investing

    Why Britain Withdrew From The ERM

    Britain may have dodged a bullet, but it certainly was not an innocent bystander and still managed to become collateral damage.
  9. Trading

    The 6 Most-Traded Currencies And Why They're So Popular

    Every currency has specific features that affect its underlying value and price movements in the forex market.
Frequently Asked Questions
  1. Can coupon in fixed-income security effect bond yield maturity?

    See how fixed-income security investors can expect to use coupon on semi-annual payments if the bond or debt instrument is ...
  2. How are savings bonds taxed?

    Learn who is responsible for reporting U.S. EE savings bond interest for taxation and when the interest can be reported for ...
  3. What is the difference between inflation and deflation?

    Determine how inflation and deflation affect prices, employment, loans, and the central banks. Economies frequently teeter ...
  4. How does the foreign-exchange market trade 24 hours a day?

    Trading in the forex is not done at one central location, but is conducted by phone and electronic communication networks ...
Trading Center