It Appears That the Markets Are Recovering

It appears that things are headed for recovery right now in various financial markets. The risk trade is making an appearance, with the dollar down against the euro on the forex market, and commodities are starting to regain the upper hand.

Another indication that recovery could be coming is the economic news out of the U.S., and the trade balance data out of China. Action Forex points out that now is the time to take advantage of a coming recovery:

The big idea I took from it: don’t let the economy dictate your participation in the markets. More specifically, the market is the leader; the economy is the follower. A nasty unemployment line (among other things) can be a distraction that keeps you from getting back into a market that’s already recovered.

U.K. Trade Data Shows Improvement

U.K. trade data is showing improvement today, prompting the sterling to make gains in forex trading against the U.S. dollar. In spite of the fact that the risk trade is off, and the FTSE 100 is down, the U.K. pound is making gains in currency trading on the trade data.

The hope is that the improved trade data is a sign that the recession is finally coming to an end in Britain. The U.K. has been limping along for months now, though, and it may be too soon to get too excited about improvements. After all, many times in the last few months investors have been excited to see the end of the recession, only to find that other problems linger.

While the improvement in trade data is certainly encouraging, a little more evidence that the U.K. economy is improving will be needed. And this will be necessary before the sterling can sustain its forex trading gains.

ECB Holds Rate Steady at 1%

The ECB announced its interest rate decision today, keeping the rate at 1% -- as expected. However, even with this low interest rate, the ECB is still beginning to unwind some of its other stimulus measures in preparation for moving into economic recovery mode.

There is still a serious drain on eurozone economic recovery, though: Greece is presenting all sorts of problems as it continues to struggle. While the ECB doesn't want to bail out the debt-ridden country, it may be forced to help to some degree by the exposure that many non-Greek banks throughout the eurozone have to Green debt.

However, this news hasn't meant a decline for the euro in forex trading against the U.S. dollar. The EUR/USD pair remains mostly rangebound right now, but the euro has the advantage.