The news that Iran is actually test firing long range missiles hit badly the already weak US Dollar which came off across the board this morning. This has resulting in flattening out yesterday’s positive move for the US Dollar despite reassurance from Bernanke that the Fed will continue supporting the US banking sector going forward.
The Yen advanced against the dollar, as Nikkei was trading 50 basis points (0.5%) higher on the day and the core machinery orders jumped to over 10% against an estimated 1.1%.
Finally, the British Pound continues to suffer against the Euro, and given the current economic outlook of the British economy, this trend is likely to continue for most part of the next year. The Bank of England is expected to keep rates on hold at tomorrow’s meeting, but no specific plans or strategy has yet been announced to tackle the pressing issues of rising unemployment, rising food and oil prices, falling house prices, and all these in a highly inflationary economic environment.
What is a recession?
A recession is an economic term that describes a period of time when an economy experiences a decrease in output, employment and trade. This can be measured by two consecutive quarters of negative economic growth, compared to the same quarters in the year prior.
In the UK, the economy is considered to be in recession if Britain’s gross domestic product (GDP) falls for two consecutive quarters. During this time, businesses experience financial difficulties and lay off workers, which also affects consumer spending as people cannot afford to purchase items as they normally would.
While recessions may be difficult for individuals who have lost their job or income, it can also lead to positive developments such as increased innovation due to increased competition and decreased prices on certain goods and services which can be beneficial to consumers.
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