By Deepta Bolaky @DeeptaGOMarkets Is Germany on the Brink of a Technical Recession? Europe’s largest economy and the world’s fourth-largest economy is at risk of going into a technical recession. Such recession arises after two consecutive...Read More
The traditional relationship between equity markets and forex is complex and often not particularly well correlated. As a result company earnings are often of little interest to Forex traders. However, this earnings season may be different....Read More
Many traders utilise options amongst their investment strategies either for income or capital growth. As with Forex and CFD trading, options offer an opportunity to get into a leveraged position giving exposure to the movement of an underlying ins...Read More
MELBOURNE, AUSTRALIA – 18 April 2019. GO Markets is pleased to announce its expansion into the Middle East and Northern Africa (MENA) region, operating as GO Markets MENA DMCC in Dubai, UAE. Located within the economic ‘free zone’ of the ...Read More
Market sentiment towards a currency pair, and hence price, changes when new information comes into the market. The most common situation that creates such a change is the release of economic data. These are planned in terms of timing to theoretica...Read More
Many traders consider trading daily timeframes but when used to trading the shorter timeframes, overnight holding costs of positions may not be something they have come across previously. This brief article has the aim of understanding why these tra...Read More
By Mike Smith Let’s face it, trading can be a lonely occupation sometimes. Along with the hope of picking up a “hot tip”, this seems to be a key reason why trading forums are so popular. Unfortunately many people leave such forums almost ...Read More
One of the most common questions we are asked on some of the webinar sessions we run is “What timeframe might be best for me to trade?”. This slightly longer article than we would usually write, seemed merited to provide some detai...Read More
GO Markets Pty Ltd updated its Product Disclosure Statement (PDS). View our updated Product Disclosure Statement. The changes made to the PDS mainly relate to adding share CFDs to our offer. Please read and save a copy of this document for your...Read More
In this brief article we explore the major differences between the MT4 and MT5 Platforms in order to assist reader in deciding whether they should consider switching to the latest version of this established Forex gateway to the market. Do you have ...Read More
By Deepta Bolaky
After a standoff between the EU and Germany, following a critical ruling on ECB’s quantitative easing program by Germany’s constitutional court, the gradual reopening of economies of member states within the Eurozone has brought some optimism.
The downside risks for the Eurozone and its shared currency have somewhat eased on the fact that Europe, which was the epicentre of COVID-19 after China, might have gone through the worst phase of the pandemic. The sentiment for the Euro was also buoyed by the EU Recovery fund proposed by Chancellor Angela Merkel and President Emmanuel Macron to help Europe’s mostly hit countries.
Unfortunately, the optimism over the coronavirus fund proposal, which aims to show unity in overcoming the crisis and to achieve quicker economic recovery, was short-lived.
Amid an unprecedented crisis, the Franco-German proposal was to provide support and reinforce EU financial relations and show that Europe is standing together. Austria, Denmark, the Netherlands and Sweden, dumbed as the “frugal four” put forward a counter-proposal that highlights the diversion of opinions in helping the Southern members states.
The Franco-German proposal is about “overcoming the crisis united and emerging from it stronger”. Both leaders proposed to make outright grants to help countries in need. They want to launch a temporary fund of 500 billion euro for EU budget expenditure:
“This would not provide loans, but rather budget funding for the sectors and regions hit hardest by the crisis. We firmly believe that it is both justified and necessary to now provide funding for this from the European side that we will gradually deploy across several European budgets in the future.”
In contrast, the frugal four wishes to provide loans rather than grants to southern European countries and expect the recipients of loans to comply with the fundamental principles of the EU and commit to strong reforms in repaying the loans. Their two-year and “one-off” proposal appears to also outline how those countries should use the funds and target sectors that are mostly hit based on an assessment.
The coronavirus pandemic is testing the solidarity of European members and is threatening to reawaken a euro crisis. Southern countries like Greece, Italy and Spain lacked the fiscal space they need to put forward an economic stimulus package to support their economies, compared to Northern countries.
Both proposals are saying “yes” to emergency aids to assist with recovery, but the disparity lies on how the funds will be financed to respond to the economic wreckage. The size of the emergency fund, the conditions of the funds or whether it will be grants or loans will be a compromise the markets are expecting to see. However, the type of compromise might be a key factor in determining the relationships of EU members.
Unprecedented times probably need unprecedented Unity.
The fact that Europe may have gone through the worst phase of the coronavirus has somewhat eased the downside risks of the shared currency. But the current geopolitical tensions with China and uncertainties on the EU Recovery plan are putting a lid on the upside momentum of the Euro.
After the sharp plunge in March, the EURUSD pair has been trading within the 1.08 to 1.09 range. Yesterday, the better-than-expected IFO Surveys in Germany has helped the pair to hold ground and hover around the 1.09 level. The recovery plan could mitigate the selling pressure and allow a probable move above 1.10 level if there is a compromise that satisfies the frugal four.
Source: Bloomberg Terminal
The immediate attention turns to the European Commission which is supposed to unveil a draft recovery plan on May 27th, 2020.
By Deepta Bolaky
Disclaimer: Articles and videos from GO Markets analysts are based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs. Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.
About GO Markets
GO Markets was established in Australia in 2006 as a provider of online CFD trading services. For over a decade, we have positioned ourselves as a firmly trusted and leading global regulated CFD provider. Traders can access more than 60 tradeable CFD instruments including Forex, Shares, Indices and Commodities.
Proud partner of Chelsea Football ClubFind out more