Recent events which may affect the forex market
It is well documented that political and economic events can have a massive bearing on the way currency pairings on the forex market behave. As such, it is important for any forex trader to follow events which may affect the currency pairings they trade, which is part of essential fundamental analysis. Here are some of the recent events which may affect different currency pairings on the forex market.
Hurricane Harvey
Having being hailed as one of the costliest natural disasters in recent US history, Hurricane Harvey’s impact on the US economy is undoubtedly a focal point for those currently investing in the dollar.
In fact, it has caused the dollar index to reach its lowest point since 2015, meaning that investors may well be interested in buying the currency whilst it is cheap. It is unlikely that a country with the USA’s wealth will be affected by this costly disaster in the long term, but it may provide opportunities in the short term for forex traders to capitalise on the weaker dollar.
Australian Job Market
The job market in Australia is currently booming, which bodes well for the economy and Australian dollar as a whole. Given that it is one of the strongest performing economies in the world anyway, this will only serve to heighten confidence in the currency, and could present opportunities for those trading forex.
Anyone who own a good amount of Australian dollars could well look to buying other, weakened currencies (such as the dollar and the pound) to potentially make significant gains if and when those currencies rise and value.
ECB President’s Warning
In Europe, the President of the European Central Bank, Mr Draghi, has warned against the euro’s rapid appreciation, which could signal that the currency is too strong and set for a period of volatility if it continues to rise in value.
This may give forex traders incentive to follow the euro’s behaviour and see whether it will be worth investing in the near future. Since the Brexit referendum in 2016, the pound has been significantly weaker than the euro, something which may encourage those with many euros to invest in the British currency, especially considering the euro’s potential future volatility.
These are just some of the events which could have a significant bearing on currency pairings of different types. Forex traders will need to keep a close eye on the market to take advantage of the potential opportunities which may (or may not) present themselves as a result of these events.