| Country Statistics |
 AustraliaCanada Switzerland United Kingdom Japan European Union Germany United States   AustraliaAustralia has a robust service oriented economy with close to three fourths of its economy linked to the finance, real estate, and business services sectors. In addition, trade in commodities also plays a large role in the economy of Australia as it is one of the leading miners or precious and non-precious metals in the world. It is a major supplier of raw materials, agricultural products, and intellectual know-how to China and the rest of East Asia. Key Stats Population: 20.0 million GDP: $666.3 billion GDP per capita: $32,900 GDP growth rate: 2.8% Unemployment rate: 4.4% Inflation: 2.4% Budget Surplus/Deficit: +$ 9 Billion Trade balance: - $800.0 million FX reserves: $48.25 billion Australia’s economy has experienced robust growth in the past 6 years due to the boom in commodities prices, Asian demand for its agricultural products and its business services, a booming housing market, and fiscal and structural reforms to the economy. Currently Australia looks to be entering a period of slower sustainable growth as the economy diversifies from the China dependent commodities trade, a slowing housing market due to past rate hikes, and a historic drought that is harming its agricultural sector. Record low unemployment and a booming Western Australia mining industry will drive demand and could cause inflation to move higher. This will cause the Reserve Bank of Australia, the monetary policy authority, to continue hiking the cash rate. The last hike was in October 2006 from 6.0% to 6.25%. The Australian Dollar is highly correlated to the price of metals. Aussie dollar is also a key component of the carry trade where speculators buy currencies that have a high yield while simultaneously selling low yielding currencies. Mergers and acquisition activity in the construction and mining industries has affected AUD/USD recently as Australian companies have been looking to buy foreign companies in the same industry. Key Data Releases RBA monthly cash rate announcement Trade balance GDP Employment CPI Retail sales Metals prices Reserve bank of Australia Data and Press Release  CanadaCanada is the 7th largest economy in the world. Canada has abundant natural resources in oil, gas, timber, and minerals. Even with this abundance of natural resources, two thirds of the economy comes from the service sector. The United States is the largest trading partner of Canada, with fully 80% of all Canadian exports going to its neighbor to the south. Many Canadian companies have operations or customers in the United States. Canada’s domestic economy is closely linked to the economic cycle of the U.S. Key Stats Population: 33.4 million GDP: $1.165 trillion GDP per capita: $35,200 GDP growth rate: 3.7% Unemployment rate: 6.1% Inflation: 2.2% Budget Surplus/Deficit: +$ 1 Billion Current account balance: +$7.0 billion FX reserves: $35.79 billion Canada’s economy has experienced an expansion in the past six years alongside the U.S. and global economy in general. Demand for Canada’s oil and gas, and mineral resources have increased the wealth of Canadians. Canada also exports technology and knowledge to East Asian nations. Canadian wealth has been invested in the property and stock markets in the past decade. The Canadian economy will in all likelihood trend alongside the U.S. economy. However, as the U.S. looks towards a slowdown in its consumer lead economy, Canada can hope to maintain good growth with its strength in mining and oil and gas production. The Canadian dollar has been driven to thirty year highs against the USD on the back of strong commodity prices. Merger and acquisition interest in Canadian resource companies from overseas companies has also driven the Canadian dollar higher. The next likely move for the Bank of Canada, the monetary policy authority, should be a rate hike in the later part of 2007. This is in marked contrast to a likely rate cut for the U.S. central bank. Key Data Releases BoC periodic rate announcements Unemployment GDP CPI Trade balance Commodity and oil prices Bank Of Canada Ivey Purchasing Managers Index Canada’s National Statistics Agency/Data Release Calendar  United Kingdom The economic power of the U.K. has not diminished with the fall of the British Empire. The U.K is the fourth largest economy in the world. The U.K. arguably has the most advanced capital markets in the world. London vies with New York as the world’s financial capital and finance, insurance, and accounting services account for the largest part of GDP and employment. Energy production accounts for 10% of GDP, the largest percentage of the most economically advanced countries. Most of these energy reserves are exported to Europe. In fact, 50% of the U.K.’s trade flows to and from the Continent. The United States accounts for the second largest trade partner. Key Stats Population: 60.7 million GDP: $1.903 trillion GDP per capita: $31,400 GDP growth rate: 3.0% Unemployment rate: 2.9% Inflation: 2.8% Budget Surplus/Deficit: -$67 billion Trade balance: -$7.0 billion FX reserves: $39 billion In recent years, the U.K. economy has been one of the best performers in the industrialized world. Mostly on the back of the strength of its financial sector and a booming housing market, the U.K. economy has grown impressively, kept unemployment low, inflation low, and remained fiscally responsible. An influx of new wealth from Eastern Europe has also kept the economy running at a high pace. Inflation due to above trend growth, tight labor markets, and high commodity prices, have lead the Bank of England, the countries monetary policy authority to raise rates 4 four times from August 2006 to May 2007. Inflation will remain the key risk to continued economic growth and continued rate hikes by the BoE are highly likely. The Great British Pound, GBP, is one of the most liquid currencies in the world. Over 6% of all currency trading involve GBP. The U.K.’s highly developed capital markets make it an attractive alternative to investors looking for assets outside of the U.S. In addition to financial flows, the value of the GBP is affected by the price of crude oil as the U.K. has a robust energy sector. GBP is also a key component in carry trades. Investors seeking high yields will buy GBP and simultaneously sell low yielding currencies such as the yen. In the near term, speculation on the timing of BoE rate hikes will take center stage in Sterling trading. Key Data Releases BoE monthly rate decisions and BoE meeting minutes GDP and Labour Market Report House prices and CPI & PPI Trade balance, retail sales Purchasing Managers Index (PMI) UK National Statistics Data Release Bank of England  JapanJapan has the third largest economy in the world. Japan is at the forefront of technological innovation, popular culture, fashion, and consumer trends. It remains a manufacturing and exporting juggernaut, with those sectors accounting for 20% of GDP. Japanese automobiles, industrial machinery, consumer electronics, and processed foods dominate the world market. Japan is a nation devoid of natural resources and must import most of the raw materials required to manufacture its goods. This heavily trade dependant economy has made the yen, the third most liquid currency in the world. The Japanese capital markets remains the most advanced in Asia as it continues to reform its banking sector. Key Stats Population: 127.4 million GDP: $4.22 trillion GDP per capita: $33,100 GDP growth rate: 2.8% Unemployment rate: 3.8% Inflation: 0.0% Budget Surplus/Deficit: -$228 billion Trade balance: $7.6 billion FX reserves: $911.1 billion After three decades of explosive post war growth in the 1960’s thru mid 1980’s, Japan has struggled to grow its economy for much of the past two decades. An inflated real estate and stock market in the 1980’s led to overburdened banks unable to finance economic growth. This has led the Bank of Japan, the monetary policy authority, to hold interest rates near zero. Growth has slowly returned to Japan in recent years as burgeoning ties with the booming Chinese economy provides a new export market for technologically Japanese wares and a new import market for low cost Chinese goods. China is now Japan’s number two trading partner, after the United States. The Japanese yen, JPY, is highly susceptible to actions, rumors, and comments by the BoJ and the Ministry of Finance, who is directly responsible for FX rates. This is partly due to the historical legacy of Japanese government intervention in the FX markets to keep yen cheap in order to promote export growth, and partly due to the heavy dependence of the Japanese banking sector on government bailouts of its bad loans. The JPY is also the biggest component of carry trades as it is the lowest yielding major currency, with an official overnight rate of 0.50%. The JPY is sold against higher yielding currencies in order to earn the interest differential. With the JPY currently trading at historical lows against many currencies, carry trade affects are more intriguing for speculators than government interventions, at the moment. Key Data Releases BoJ rate decisions and statements immediately following decisions GDP and Employment Rate Tankan survey (economic survey of Japanese business) Tokyo CPI Japan Statistics Bureau Japan Ministry Of Finance Statistics Bank Of Japan  European Monetary UnionThe European Monetary Union consists of 13 states of the European Union who have agreed to use the Euro as their currency. The combined economies of the EMU is the world’s second largest economic power and encompasses the nations of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Holland, Portugal, and Spain. These countries share the common currency, Euro, and a single monetary policy dictated by the European Central Bank (ECB). The largest economies in the EMU are Germany, France, and Italy. Economic movements in those countries affect the wider EMU. The EMU is a largely service oriented economy accounting for 70% of GDP. They are also a large trade partner to the rest of the world, accounting for nearly 20% of global trade. The common economy gives the combined countries of the EMU international clout in trade, political, and economic affairs, it would otherwise not have as individual nations. Key Stats (includes all EU nations) Population: 494 million GDP: $13.88 trillion GDP per capita: $31,900 GDP growth rate: 3.1% Unemployment rate: 7.1% Inflation: 1.9% Budget Surplus/Deficit: -$360.0 billion Current Account balance: $7.6 billion The EMU is experiencing tremendous success as it nears the first decade of its existence. As Eastern European countries enter the wider EU and are preparing to join the EMU, the economies of Western Europe are undergoing structural reforms that are allowing them to become more competitive in the global economy. Led by Germany and Ireland, reforms to capital and labor markets have spurred strong economic growth domestically while maintaining low inflation, and steadily chipping away at the historically high unemployment rates. France and Italy have yet to enact the level of reforms as other Western European nations and have lagged behind. Internal trade within the EMU has grown as expected from monetary union. External trade has grown as well, paradoxically in the face of a strengthening Euro. The U.S.A. remains the main trading partner, followed by Japan. The ECB has been on a steady rate hike cycle since Dec 2005. They have hiked rate eight times from 2.0 % to 4.0% as of June 2007. Inflationary pressures from elevated global commodity prices, and increasing labor costs at home will remain the bank’s central concern. The Euro is also the major beneficiary of central bank diversification of FX reserves away from the USD. With the growing importance of the EU in trade and political relations, this trend is likely to continue. Key Data Releases ECB monthly meetings and statements EZ GDP and Harmonized Index of Consumer Prices (HICP) German unemployment rate and German Industrial Production Euro Zone Data ECB – European Central Bank  GermanyGermany is Europe’s largest economy and the economic powerhouse of the EU. Germany is a global leader in technology, chemicals, automobiles, and in steel. It is the 5th largest economy in the world and is a large exporter of its goods to all the advanced economies of the world. German exports of machinery, vehicles, and chemicals dominate world markets. German imports textiles, agricultural products, and natural resources to feed its industries. Although know for its manufacturing prowess, the service sector accounts for 70% of GDP and the same percentage of German employment. Key Stats Population: 82.4 million GDP: $2.6 trillion GDP per capita: $31,900 GDP growth rate: 2.5% Unemployment rate: 9.1% Inflation: 2.0% Budget Surplus/Deficit: -$ 67 Billion Trade balance: + $217.0 billion FX reserves: $48.7 billion The past three years has seen significant structural changes in the German economy. Corporate and labor reforms have made German companies more competitive and profitable in the past 3 years. This has spurred above average economic growth and lowered the stubbornly high unemployment rates, a legacy of Germany’s commitment to social welfare. Despite the continuing process of integrating East Germany into its economic fabric and a higher Euro, German industries remain efficient, profitable, and produce highly valued products by consumers around the world. Continued reforms to increase labor force participation and encourage new enterprises will help Germany maintain an elevated GDP growth rate and boost its employment levels. As the economic leader of the Eurozone, Germany’s economy is the main economic determinant of Euro currency movements. Although ECB interest rate policy takes into account the economies of the greater EZ, German inflation, employment, and industrial production dominate ECB deliberations more than any other EZ economy. Recent reforms have put Germany on a good footing to continue to grow its economy and its labor force. Risks to further German economic growth are continued hikes in the ECB interest rates and further increases in the value of the Euro decreasing global demand for its high quality exports. Political winds can also shift quickly away from the current stance favoring structural reforms to the social welfare and protectionist policies of the past. Key Data Releases Unemployment rate and trade balance Industrial production and industrial orders Manufacturing PMI ZEW consumer and IFO business sentiment indexes IFO Institute Bundesbank  United States The United States of America is the largest single economy in the world. The U.S. economy is mainly a service based economy, with 80% of GDP coming from the service sector. It leads the world it most industries from internet technology, to agriculture, to biomedical research. The U.S. is the largest trading partner to much of the world, accounting for over 20% of total world trade. The U.S. has the most developed capital markets in the world. The U.S. real estate, fixed income, equities, and derivatives markets attract much of the world’s invested capital, being home to 70% of the world’s savings. Key Stats Population: 301 million GDP: $13.0 trillion GDP per capita: $43,500 GDP growth rate: 3.2% Unemployment rate: 4.5% Inflation: 2.3% Budget Surplus/Deficit: -$67.7 billion Trade balance: -$845 billion FX reserves: $69 billion The U.S. economy is entering the slow growth phase of the current economic cycle that began with the recession of 2001. The overall economy remains strong with employment and consumer spending at historically high levels. This is on the backdrop of a declining manufacturing sector, a collapse in the housing sector, high energy prices, high government expenditures in the fight against terrorism, and record high budget and trade deficits. These headwinds to further economic growth, along with the previous 17 rate hikes by the Federal Reserve Bank, the monetary policy authority of the U.S., could lead to a recession in 2008 as former Chairman of the FOMC Alan Greenspan has noted recently. The USD is the most liquid currency in the world accounting for 90% of all currency deals. The direction of the dollar will likely revolve around the direction of the domestic economy. Currently the U.S. economy is in a sweet spot where growth is good and inflation is stable. This condition can change quickly and currency speculators should pay close attention to incoming economic data In addition to interest rate moves, the direction of the USD will be influenced by the continued diversification of foreign investors away from U.S. assets. The trade deficit with China will continue to affect the value of the USD in the coming years. Key Data Releases Non-Farm Payroll (employment) GDP Housing sector data, consumer confidence, retail sales, energy prices Institute for Supply Management indexes CPI (consumer inflation), PPI (producer inflation), PCE (Fed Favorite) Trade deficit U.S. Census Bureau U.S. Department of Commerce U.S. Bureau of Labor Statistics Institute for Supply Management (ISM) FOMC - Federal Reserve Bank of Washington D.C. Federal Reserve Bank of N.Y. St. Louis Federal Rserve Bank |
