In what may be termed as a sigh of relief for the US economy and the Forex world, a marginal change in joblessness claim numbers suggested that all is not lost for the US economy. The positive news comes out of a fall in jobless claims filed from 432000 a month ago to 404000 recently. This suggests that some more Americans have become employed and that employment generation has not come to a grinding halt. For the US economy to come back on tracks it is essential that the number of unemployed falls, which is the most important remedy for increasing the disposable income at the hands of the US consumer and increase demand. A separate report also indicated that the US economy grew at an annualized rate of 2% in the third quarter of this year. While this is higher than the 1.3% rate of growth for the second quarter, it is still too less to generate employment in substantial numbers. However, in the least it suggests that the US has managed to avoid a second recession, which seemed to be a possibility just sometime back.
Other reports suggested that the US trade deficit to $45.61 billion in August from $45.63 billion in July. A falling trade deficit can result either from a fall in imports or a rise in exports. Falling imports would not necessarily be a good sign as it represents weak demand. Rising exports on the other hand, could provide a boost to the US economy and Forex trading industry and could even be a good development. The latter seems to true and it is the demand from growing economies that is helping US economic growth and acting as a counterbalancing measure to the reduced domestic demand. However, rising economic uncertainty in the Euro area and in the US has made investors move out of riskier investments to take shelter in the safe have of the US dollar. This has led the US dollar to appreciate, which is not favorable for exports.
The real threat to US recovery now does not seem to be internal as various economic indicators have shown some positivity over the last few months, even though they may be not at their best behavior. The real threat appears to be from the Euro debt crisis and the weak demand from the region as also any financial exposure that the US might have in the region.
Notwithstanding the improved situation on the joblessness front and the trade deficit, the American consumers continued to be bearish in sentiment as could be gauged from the Bloomberg Consumer Comfort Index. Colluding with the sentiment was a fall in consumer goods imports in August, suggesting that the level of consumer confidence is low and consumer spending is constrained.
From the above it appears that the US economy needs just a little bit of appropriate stimulus so as to kick start its economy, create demand and employment and lead it to a self feeding cycle, out of the current sticky situation it is stuck in.
Quit wasting your time with Forex if you aren't making profits at all. The business of currency trading is a game played only by those willing to learn.
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