CORE PERIMETER TRADING MODEL – China, Europe & USA

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There are 3 economic powerhouses that drive the global economy. These are China, the EU, and the USA. The growth nodes are surrounded by perimeter economies that depend strongly on the core’s performance. These are literally export-oriented countries whose fortunes oscillate with greater magnitude and frequency towards sentiments of the underlying market, which are higher than their counterparts and global business cycle changes.

Assets that can be found in these perimeter countries usually carry higher yields. The additional risk that may be incurred by investors when investing there offers generous returns. In areas where markets are literally optimistic concerning the outlook for global growth, marketers usually prioritize returns rather than being on the safe side and normally prefer assets that are comparatively riskier and more cycle-sensitive. Capital flowing is later reflected in export-oriented countries and its core to the perimeter of the trading model.

But, in a market downturn, investors are usually driven by the desire of preserving capital instead of maximizing the returns. In such a given situation, investors shift to assets that will offer them low yields but that are not risky.

The core-perimeter framework trading model enables marketers to have a clear understanding of macro-fundamental interactions that exist between powerhouse economies and other perimeter counterparts. This offers them valuable insight guiding them on marketing assets embedded in their relationship.

USD/EUR RETAINS THE BULLISH TREND AHEAD OF THE UPDATES OF USA EMPLOYMENT REPORT

GBP bullish

USD/EUR exchange is very low from the beginning of this week. But, Phillip Lane, European Central Bank Chief Economist stated that the Euro area happened to be in the 2nd stage of recovery and the GBP forecast. The report from USA Non-farm payrolls may have a huge influence on the exchange rate, with that; there is an expectation that there will be an increase in employment for the 2nd consecutive month.

The USA economy is expected to give out 3 million jobs following the expansion of 2.5 million in the previous month. The bullish reaction may be triggered following the positive development of the US Dollar. This will undermine speculation for increased monetary support.

FOMC (Federal Open Market Committee) may be forced to remain on the sidelines during decision-making concerning the next interest rate.

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