FX.co ★ Fundamental Analysis, August 16, 2011

The U.S. economy not going through its best moment: macroeconomic indicators have generated much concern on investors, resulting in lower than previous estimates in many reports published in recent months. Such is the case of the labor market, with an unemployment rate above 9%, the housing market, where prices are declining, and an economy that is growing very slowly, with a GDP growth for the second quarter of such only 1.3% and a downward revision of first quarter growth to 0.4%. Finally, the manufacturing sector also showed a slowdown from the previous year.


Given this grim picture, and amid instability in financial markets, the Fed met Tuesday to define new monetary policies and interest rates. The meeting decided to keep the benchmark interest rate at the current minimum levels until mid-2013. Investors awaited the implementation of a new incentive compensation plan, for the moment not apply but were dropped for the medium term.

We believe that once again will conduct an expansionary monetary policy by buying back assets (QE3), which could be implemented on the end of this year or early next year in order to inject liquidity into the markets, seeking to stimulate economic activity as well financial markets.

In Europe, the pump is getting bigger, do not pass or two weeks when we hear that one of the countries in the sector have to their debt problems, recently, Italy "advance" a budget-cutting plan to avoid falling into the situation where live Greece, this was the initiative, but we know that results will be as a result of this plan, Spain is in a similar situation and problems of Greece, although the injections are still latent.