US Proclaims Bail Out of European Union

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According to ITFX reports, yields on Italian and Spanish sovereign bonds continue to hover near 7% historical highs, French bond yields are climbing and only Germany seems to show any sort of positive economic growth. The United States economy has issues of its own with which to deal with. The reports indicate that the United States budget deficit is roughly equivalent to its GDP and all efforts by the 12 member bipartisan super committee to trim over $1 trillion from the Federal budget over the next 10 years seem to be going nowhere. Forex currency exchange markets currently show little indication of establishing any sort of trend, long or short term.

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InvestTechFX emphasizes that the new government in Spain and Italy are facing greater economic challenges than at any time since the EU was established. Both countries have debt levels of around 120% of GDP. ITFX experts state that the solution is rather simple, but essentially impossible to implement.

Massive spending cuts to social programs such as health care and education are the only ways to slow down, let alone reduce, the growth of budget deficits. Recent rumors that the United States Federal Reserve could potentially become involved in guaranteeing EU debt, similar to what occurred on a limited basis in 2008, has United States investors scratching their heads and wondering why the Fed would get involved in Europe when the domestic situation is experiencing so many challenges.

They justifiably question the benefit of rescuing Europe when policymakers here seem unwilling or unable to achieve a compromise on how to deal with what, by EU standards, are minor issues, that is, budget deficits relatively equal to GDP as compared to 120% of GDP. This uncertainly doubtlessly contributed to an over 2% decline in the Dow, which spent the majority of Monday’s trading session down roughly 300 points, with an equivalent negative showing by the S&P.

Some analysts predict that the United States Central Bank is willing to offer discounted rates just as it did in the financial crisis of 2008. This is because if EU countries are unable to maintain their current level of accounting for approximately 20% of United States exports, the weak economic recovery in the United States is threatened. If Europe cannot import American goods, American consumers whose livelihoods depend on exports to EU countries will be forced to cut back on the purchases of goods and services that fuel economic growth.

This interconnectedness of world economies means that trouble in Europe has the potential to spread to the economies of other continents.

FX trading, difficult in the best of times, becomes even more problematic when currency traders have no clear picture of a currency’s future beyond the next economic release or major economic news event. Online Forex traders, particularly small, retail traders, have been finding currency markets in narrow sideways channels, have what many Forex currency exchanges experts consider the most challenging scenario that exists confronting them: not whether to go long or short, but whether or not price activity justifies trading at all.

During periods like these where narrow, sideways channels form, observing the spread rates of market maker brokers can be very illuminating. In this scenario, market maker spreads will decrease as brokers attempt to stimulate trading activity.

Savvy traders can use this information, along with the services of a Forex ECN, such as InvestTechFX, to place the low-volume, short time duration trades that the current environment mandates.

Low, fixed spreads available from InvestTechFX mean that traders who would otherwise be forced to remain inactive can trade with the confidence that comes from knowing that profits will not be contributed to the broker’s account.

For more information on how a small trader can participate in Forex currency exchange with low trading costs that were once the exclusive province of international banks and corporations, or simply to learn more about how to make Forex trading a part of a diversified investment portfolio, should visit the InvestTechFX website at


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