Mr. Chenlei

EUR/USD future---Fundamental Analysis

Recently, there are lots of troubles around the United States and euro zone since the debt crisis started in Europe spread to the United States. Dow Jones reported that Morgan Stanley, Goldman Sachs lowered its global economic growth forecast for this year and next year, and Goldman Sachs predicting a mild recession in euro zone and increased risk of double dip in the United States (Maatouk, 2011).

1. Euro Area

According to a report published on Tuesday by the statistical office of the European Union (EU) showed that the industrial producer prices index (PPI) fell by 0.1 percent in Euro zone nations in August compared with last month (Brussels, 2011).

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Chart 1 source: Trading Economics

The Tradingconomics also stated that the Euro Area’s average quarterly GDP Growth expanded 0.2 which is also lower than the historical average 0.42 from 1995 until 2011.There are three largest economies of the euro area are Germany, France, Italy, respectively. They are contributing more than half in GDP of euro area. According to the Tradingeconomics (www.tradingeconomics.com) chart showing, Germany GDP second quarterly growth rate of 2011 just is 0.1 percent which it’s lower than the 0.31 historical averages. Italy expended 0.3 percent and France almost got nothing growth in this second quarter compared to the same quarter of the previous year.

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According to the European Central Bank (ECB), reported a current account deficit equivalent to 3163 Million EUR in July of 2011. The Euro Area Current Account to GDP is -0.4 percent, which the historical average is -0.23 percent of GDP. Contrary to other countries in euro area which almost are negative, the Germany’s ratio is 5.7 percent. It is positive and much higher than others. Generally speaking, the stronger Current Account to GDP means the export revenues is boosted. Usually, the stronger ratio will bring the higher expect...