The American economy has delivered some conflicting data sets in recent times, as financial market growth has conflicted with fluctuating levels of unemployment, job creation and consumer confidence. This is a trend that has been prominent across several nations, as the global economy has teetered on the brink between recession and sustainable economic recovery.
With the second financial quarter of 2013 now firmly underway, however, there are signs that global economic growth is now far more robust and consistent. This means that both economies and the financial markets are experiencing universal prosperity, triggering improved sentiment among business owners, consumers and traders.
The recent economic outlook supported this assertion, with markets rising on Monday after significant gains were made by the American economy. The most recent support of growth was triggered by an extremely optimistic U.S. jobs report, which gave weight to the suggestion that the global recovery may be gathering momentum. This information is also supported by this survey that offers a statistical analysis on employee retention rates. Both the U.S. Dollar (USD) and stocks subsequently soared to new highs on Friday, after unemployment fell to just 7.5% and achieved its lowest level since the distant summer of 2008.
The impact of this was felt globally, as the Asia-Pacific markets also soared to considerable heights. Hong Kong rose by 1.02% during afternoon trade of Friday, for example, while Shanghai advanced by a further 1.13%. Sydney also followed suit, while Malaysian shares soared by a staggering 7.76% to achieve a record high of 1,823 points. When you consider that both the Dow Jones Industrial Average and S&P 500 have both had the distinction of breaking similar national records in recent times, then you begin to understand the importance of sustainable economic growth.
Even European nations seem to be displaying more positive signs, with the UK having recently avoided the threat of an unprecedented triple-dip recession. This came as a considerable surprise to economists, who had questioned the governments austerity measures and forecast a prolonged period of recession for the island nation. With the British economy growing tentatively and the nations level of borrowing having fallen for the first time since the beginning of the recession, it seems as though America remains influential in terms of dictating the terms of global economic development.
While stocks have soared considerably in the wake of American economic expansion, however, those involved with forex trading can also look forward to greater levels of prosperity. Whilst the USD remains the most popular influential currency in the world, it must also be remembered that a positive sentiment makes it far easier for traders to identify trends associated with the market and wider economy. As a result, economists are beginning to predict a cycle of growth and development that can impact on countries throughout the world.
Despite the recent economic uncertainty that has undermined the prospects of a global recovery, America appears to be leading the way towards more sustainable growth. This is also impacting heavily on the financial markets of the world, especially those that deal in stock equities and international currency pairs in the far East. So long as the U.S. economy can sustain its current level of momentum, there is every chance that the ghosts of the global recession may be finally laid to rest.
The recent global recession has taught a number of harsh economic lessons, each of which has had an impact on businesses, home-owners and citizens throughout the world. Above all else, however, it has highlighted the fine margins that separate economic growth and recession in an increasingly connected world.
This is a lesson that has been heeded by financial market and forex traders, who have learned how to thrive and prosper in currency dealings in spite of the prevailing economic climate. Forced to tread the tapering lines between loss and profitability, they have developed numerous innovative strategies to cope in the face of negative economic trends.
Forex traders are particularly at the mercy of economic conditions, as they operate within a volatile market that continues to fluctuate on a daily basis. While this instability is often offset by high levels of liquidity and leverage, it creates a market environment where profitability can be hard to sustain. This issue can become extremely prominent during times of recession, especially for individuals whose strategy is based on interpreting economic trends and executing trades accordingly. It therefore stands to reason that a recession should prompt traders to modify their strategies, while also having an impact on individual investors according to their own subjective experience.
Take the contrast between forex traders in America and their British counterparts, for example, who reacted differently according to their own experience of the global recession. At the hub of the financial decline, America hovered on the brink of a crisis that threatened millions of businesses and jobs nationwide. While the federal government battled to reduce its spiraling deficit, however, the financial markets rebounded and maintained exceptional levels of volume, performance and profitability. As America approached the much feared fiscal cliff during the final financial quarter of 2013, it became clear that Wall Street traders had become immune to negative sentiment while learning how to use downward trends as a way of incurring gains.
This contrasts sharply with the attitude of British forex traders, who historically have adopted a more risk averse approach to navigating the financial markets. While the UK has suffered from 5 years of mild economic decline and stagnation since 2008, it has recently avoided a triple-dip recession and has kept its head above the murky waters of financial crisis. As a result, its traders have not been exposed to the same level of negative sentiment that has affected their U.S. counterparts, meaning that they have not been forced to reassess their strategies or develop a more robust mindset when it comes to trading in a declining market.
The Bottom Line for Forex Traders from Around the World
The margins between success and failure are particularly fine, and they mirror the lines that separate economic growth and recession. This is especially true in the volatile and unpredictable forex market, which remains malleable to sudden movements and the machinations of economic news trends as they unfold.
Individual traders are also impacted by their experience during a recession, as this determines their mindset, philosophy and the strategies that they use to obtain profitability. In many ways, the recent market growth in the U.S. is evidence of this, as traders have adapted to ensure that their trades are compatible with a depreciating economic condition.