It was a brutal day for investors and Forex traders with large holdings in the Euro. A combination of stark warnings from the United States Federal Reserve about the risks of a protracted recessionary period, and data that reveals a contraction of business output in the Euro-Zone, has led to the most significant sell off on world markets this year has seen so far. Despite data that indicates less jobless benefits were claimed in the United States and an unexpected increase in home sales, investors simply weren't taking any chances.
George Soros, a self made billionaire and investor, recently expressed his belief in a television interview that the United States is already in a double dip recession and to expect the dollar to strengthen against the Euro. Soros also indicated that the continued inaction by large European economies to bailout other Euro-Zone countries in near default, could have worldwide implications that were beyond his imagination. When the interviewer requested an explanation for this strong position, Soros began to explain that the Euro is currently the favored currency of emerging economies. If the Euro were to quickly depreciate in value, the net worth of these countries' economies would quickly go down.
The Forex Robot team believes that the economic situation for the global economy is in a very dangerous place. Many Western countries are stuck between inflationary stimulus strategies and austerity measures. These policies almost seem contradictory and have had little consequence so far.