Forex and the Stellar Euro GDP

We've all heard the saying that "No news is good news."

But what about this one, "Good news is no news." Something doesn't quite seem to fit. Good news should cause rejoicing, jubilation, cheer and enthusiasm. Today we witnessed great news out of the Eurozone, but nobody clapped. Nobody cheered. Nobody stood up and gave a toast.

The Eurozone was forecasting 2nd quarter avanced growth of+0.7% and a year over year figure of+1.4%. So when the data was released that the 2nd quarter figure was really +1.0% (and the year over year was +1.7%), an astounding 30+% surprise, the euro should have shot through the roof. I've seen similar positive surprises move a currency 200 pips in just hours. But what did we get? Bupkiss. Zero. Zilch. Nada.

What gives? It seems that underneath the surface lies a bubbling uneasiness. A fearful restlessness that perhaps the data isn't what it appears. After all, where is the spending in Europe? Where is the Manufacturing or Industrial production? Where are there any real signs of inflation? And if they really are producing all this stuff, who else in the world is buying it?

I have often bemoaned to you my leariness of government generated reports. Those who have a vested interest in them certainly can influence their release or the way in which they are calculated at the very least. The eurozone is the worlds' second largest economy by some measures, and the largest by others. There is no way that the world's largest economy comes out with a 30% surprise and it doesn't move the markets. Either traders think they are lying (can I see a show of hands?) or the markets are so fearful of other macro debt issues that this tier one data becomes second fiddle.

Either way, we may be in for quite a decline in the currencies. Goldman Sachs has reported that they feel there is a 50/50 chance of a double dip recession here in the US. They are a bit late for the millions who have lost their jobs and remain out of work, but I guess we can welcome them to the party. Nothing like pointing out that there is an 800 pound gorilla in the room. Nevertheless, when GS speaks, the lemmings listen. NOW they are afraid. This could spark another massive US dollar rally like the one that ended '08.

Let's see, 2010 has seen record foreclosures countrywide. We have had more banks fail this year than at the height of the credit crunch. The unemployment rate is still hovering at its highs (and would be higher if the government would actually tally up the people who have quit looking for work altogether...but somehow they aren't worthy of being counted).

Credit debt is down, savings are up, confidence is on the wane...any of this sound like a recovery to you? Hold onto you hats...this could get very interesting!

Have a great weekend!

Bill
www.thefxtradingmasters.com