recovery in the second half of the current year.
Majors in general fell for the third consecutive day, the Euro fell against US dollar and the Japanese Yen as markets projects a 50 basis points cut by the ECB later this week, yet comments released from official clearly indicate that no rate cut will be seen. Also the British Pound followed this loss, easing down to 131.78 levels against the Japanese Yen and to 1.4752 levels against the US dollar.
Even if the Euro and the British pound weakened against the US dollar giving it some slake to advance a little, the dollar couldn't resist falling against the Japanese Yen, where now the USD/JPY is currently trading at 89.35 levels the lowest in two weeks.
This strength in the Japanese Yen gained against majors will continue to harm the Japanese export levels because now their goods are considered to be expansive. The strong yen is dimming the outlook; earnings have been hit badly from those high levels which top the weakening global demand on products in attempt to preserve the left over money as they project more turbulence in financial markets.
Due to the strengthening Yen, the Trade balance shifted from a surplus of 145.8 billion yen into a deficit of 93.4 billion yen, narrowing down the adjusted current account surplus to 654.1 billion yen from the previous 1113.2 billion yen, also the current account total surplus narrowed down to 581.2 billion yen from the previous 960.5 billion yen.
From a neighboring economy, China which is considered to be a rival to the United States is feeling the heat; exports fell in December 2.8% coming worse than the previous fall 2.2%, also imports fell heavily 21.3% from the previous -17.9%. This fall came even after the Chinese government restricted a vast appreciation to the Chinese Yuan just to give their goods a competitive advantage, due to those rules and regulations the United States tried on various occasions to pressure the Chinese government to let their currency appreciate more against the US dollar.
The mentioned weak data got reflected on the stock markets; the US indices closed in the red zone yesterday; Dow Jones Industrial Average fell 1.46% or 125.21 points reaching 8473.97 levels, S&P 500 index fell 2.26% or 20.09 points reaching 870.26 levels and NASDAQ composite fell 2.09% or 32.80 points reaching 1538.79 levels.
Also the Asian indices fell; Nikkei Index fell 4.79% or 422.89 points reaching 8413.91 levels to record more than 5% losses since the beginning of the year, also Hong Kong's Hang Seng Index lost 2.10% or 293.33 points reaching 13677.67 levels.
The Asian indices fell due to the weak earnings projections in addition to the falling Crude Prices as the economic demand on commodities continues to weaken; February Crude contract prices breached the $40 per barrel to slip down to reach a low of $36.27 per barrel in the Asian session today.
With this gloomy outlook markets are waiting for various fundamentals from the Royal land and the United States...
United Kingdom is struggling like the United States; they are facing a weakening housing sector where prices fell to the most since 1978 which will continue to distress the economy in a deeper recession, and resulting from this weakness the Bank of England got pressured to slash down their rates to 1.50% last week's rate decision adopting the Zero interest rates policy to mitigate the continuous fall in consumer prices which is putting the Kingdom under the threats of Deflation!!!
Our calendar contains the Trade balance data, market projections points out that the deficit in the visible balance of trade narrowed down in November to -7500 million pound from the previous 7750 million pound bolstered by the weakening levels domestic demand which took imports down along with the fall in crude prices. Also the Trade Balance Non-EU deficit will also narrow down to 4200 million pound from the previous -4359 million pound.
Moving across the Ocean to the United States, we have the Trade Balance reading for the month of November, according to the median estimate the deficit narrowed down to 51.0 billion dollar from the previous 57.2 billion dollars.
The fall in crude prices in November to low of $48.15 per barrel closing at the end of the month at $55.12 per barrel managed to bolster the levels of imports and exports outside the United States, where the narrowing deficit would be a result from the weakening domestic demand on the foreign goods taking the imports reaching down south.
Recession signals in the United States looms where more interventions are needed to prop up growth once again in addition to restoring the long lost confidence which is dominating the citizens' behaviors.